Scandinavian Working Papers in Economics

Working Paper Series,
Trade Union Institute for Economic Research

No 164: Economic Reforms and the Poor

Tove Strauss
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Tove Strauss: Trade Union Institute for Economic Research, Postal: FIEF, Wallingatan 38, SE-111 24 Stockholm, Sweden

Abstract: This paper analyzes the effects of economic reforms for different income groups. My interest is spurred by the international debate on the social consequences of reforms and the potential adverse effects on poverty in particular. I find that the poor are in general positively affected by trade reforms, inflationary control, and structural reforms, while government consumption reduction affects the poorest income quintile negatively. In countries having undertaken World Bank financed reforms actual income of the poor was higher than predicted. Moreover, as the impact of reforms was strongest on the poor, World Bank support appears to reduce income inequality.

Keywords: Economic reform; Poverty; Income distribution; the World Bank

JEL-codes: C23; E65; O11; O15; O19

25 pages, December 22, 2000

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