Universal social protection in Tunisia: Comparing the effectiveness and cost‐efficiency of food and energy subsidies with a proposed universal child allowance programme

Abstract

AbstractThis article compares the effectiveness and efficiency of a food and energy subsidy programme, which is currently implemented by the Tunisian government, and a universal child allowance programme that is discussed as an alternative to these subsidies. The empirical analysis is based on microsimulations on the poverty impact and the costs of both programmes based on Tunisian household survey data. Our results suggest that a universal child allowance is approximately twice as efficient (i.e. the cost of lifting one person out of poverty under a universal child allowance is half of the cost of lifting one person out of poverty using subsidies) in reducing poverty than the current food and energy subsidies. The article concludes that efficiency‐enhancing social protection reforms are possible based on a universal approach. Such reforms can be achieved without resorting to narrow poverty‐targeting as an alternative to the subsidies whose negative side‐effects (e.g. non‐negligible exclusion errors, incentives to informality and social tensions) and costs (both public and private costs related to intensive data collection to improve targeting) are usually overlooked or underestimated.