Report No. 47490-RO Romania Poverty Monitoring Analytical and Advisory Assistance Program Are the Most Vulnerable Protected? June 30, 2008 Human Development Sector Unit Europe and Central Asia Region Document of the World Bank CURRENCY AND EQUIVALENT UNITS ExchangeRate Effective June 8 2008 Currency Unit = RON (New Romanian Lei) 1 Lei = US$0.42 US$l =Lei 2.33 FISCALYEAR January 1-December 31 ACRONYMS AND ABBREVIATIONS ACOVI Romanian LivingConditionsSurvey CEM CountryEconomic Memorandum CPS Country Partnership Strategy ECA Europe and Central Asia ESSPROS EuropeanSystem of integrated Social Protection Statistics EU EuropeanUnion GDP Gross Domestic Product GNI GrossNationalIncome HBS HouseholdBudget Survey HIS IntegratedHousehold Survey JIM Joint InclusionMemorandum LSMS Living StandardMeasurementSurvey LTS Life in TransitionSurvey MLFEO Ministry of Labor, Family, and EqualOpportunities MLSSF Ministry of Labor, Social Solidarityand Family NIS National Instituteof Statistics SILC Survey of Income and Living Conditions Vice President Shigeo Katsu Country Director Orsalia Kalantzopoulos Country Manager Benoit B1are1 Sector Director Tamar Manuelyan Atinc Sector Manager Gordon Betcherman Task Team Leader Cem Mete Acknowledgements This report was prepared by Cem Mete (Senior Economist, ECSHD) and Lucian Bucur Pop (Senior Social Development Specialist, ECSSD). Peer reviewers for the report were Catalin Pauna and Emil Daniel Tesliuc. The preliminary findings o f the analyses presentedhere have beendiscussed with the staff o f the Ministry o f Labor, Family and Equal Opportunities (MLFEO) during meetings that took place inBucharest. A training workshop was organized inparallel with preparation of this report, titled "Poverty and social inclusion analysis workshop" and it took place in Bucharest during November 5-10 2007, organized jointly with the Bank and the Romanian National Institute o f Statistics and the Department o f Policies, Strategies, and Social Inclusion (DPSSI) inthe MLFEO. The participants included the staff o f MLFEO, University o f Bucharest and Quality o f Life Research Institute. The topics that were covered through presentations and discussions included (i)various definitions of poverty and social inclusion; (ii)data sources for poverty and social inclusion analysis; (iii)constructing the welfare aggregate and choice o f poverty lines (applied sessions focused on the use of SPSS software for this purpose). The Government of Romania provided invaluable assistance during this process. In particular, the team is grateful for the collaboration of the MLFEO through Adina Dragotoiu (Director o f the Department o f Policies, Strategies, and Social Inclusion), Mihaela Grecu (Director, Social Assistance Rights and Social Services), Daniela Docsanescu, and Dumitru Hang (experts, General Direction o f Social Inclusion and Social Assistance). i Table of Contents Acknowledgements.................................................................................................................... i I Introduction ............................................................................................................... 1 I1 Overview of the Social Protection System and its Overall Effectiveness.................3 I V Effectiveness o fthe Main Social Assistance Programs.......................................... I V Moving closer to the social inclusion common objectives .review of key issues 14 Appendix 1. Methodological aspects of the beneft incidence analysis.............................. ..-10 -17 Appendix 2. Magnitude of the main benefts ...................................................................... 18 Appendix 3. Main Social Assistance Benefits: Levels and Eligibility Thresholds..............19 Appendix 3. Main Social Assistance Benefits: Levels and Eligibility Thresholds..............19 Appendix 4. Decomposition of the Gini Index by Income Sources .................................... -20 Appendix 5. Effectiveness of Social Protection Benefits .................................................... 22 Appendix 6. Geographical Distribution of Poverty and Main Targeted Transfers .............35 List of Figures Figure 1: Social ProtectionSpendingin Selected EUMember States............................................ 3 Figure2: Spendingon Main Social Assistance Benefitsin Selected EU Member States (2005) ...4 Figure3: Shares of SP Benefitsin the Net Income......................................................................... 7 Figure4: Concentrationof selected benefitsin consumption, 2006................................................ 9 Figure 5: Performanceofthe maintargetedprogram.................................................................... 12 Figure 6: Performanceof Social Assistance (SA) Cash Transfers in Reducingthe PovertyGap 15 .. 11 List of Tables Table 1:Households coverage with social benefits ........................................................................ 6 Table 2: Coverage of the poor with social protectionbenefits .................................................... 10 Table 3: Decomposition of the Gini index by income sources, 2006 ........................................... 16 ... 111 POVERTY MONITORING ANALYTICAL AND ADVISORY ASSISTANCE PROGRAM: Are the MostVulnerable Protected? I Introduction The rapid economic growth since 2000 has been the main driver of poverty reduction in Romania. However, even under the current positive growth scenario, there are still people who live in poverty, and some who are unlikely to benefit from future growth and thus may continue to be left behind'. For these people an effective redistributive social policy and targeted interventions are needed. The purpose of this note is to assist the Ministry of Labor, Family and Equal Opportunities (MLFEO) to analyze and monitor the effectiveness of the mainsocial safety net benefits to fight social exclusion and reducepoverty. To determine the extent to which social transfers offer protection to the poorest groups o f the population, the paper uses the last available (2004-2006) rounds of the Household Budget Survey data. The analysis presentedhere uses the consumption aggregate and the absolute poverty definition presented in the 2003 and 2007 Poverty Assessments2. Three main indicators are used to assess the effectiveness of social protection (SP) programs3:coverage (share of population covered by the programs), targeting (share of funds directed to each welfare group of population), and adequacy of benefit (share o fthe benefit in the consumption of beneficiaries4). The paper begins with a review of the mainfindings, followed by an overview of the social protection system and its overall effectiveness. Then it assesses the main social assistance programs, and concludes with a review of key issues. 'Under the scenario of a 5-6 percent growth per annum, the absolute poverty would be reduced from 13.8 percent in 2006 to 6-7 percent in 2010, meaning that over one million people will still live below the absolute poverty line (World Bank, 2007). 'The poverty measurement methodology was elaboratedjointly by the Romania Anti-Poverty Commission, the National Institute of Statistics, and the World Bank, in 2002. 3For additional details on the methodology, see Annex 1. 4The survey data analysis will consider both direct and indirect beneficiaries (i.e., all the members of a household receiving a benefit). 1 Main Findings 0 Romania made efforts to redistribute the benefits o f economic growth by keeping constant the share o f GDP devoted to social protection benefits, but only a small share o f this redistribution reached the poor. At the same time, the "spillover" (share o f funds going to the non-poor) o f the social assistance cash transfers increased, and their performance incovering the poverty gap weakened. The social protection system provides extensive coverage in terms o f number o f beneficiaries, but some o f the most vulnerable groups, such as poor farmers and poor families with children are not adequately protected. The mix o f targetedhon-targeted programs is relatively good (when compared with the average EU27), but the spending on targeted benefits is decreasing in relative terms (as share in GDP). As a consequence, the targeted benefits have low coverage o f the poor (a significant proportion o f poor are not reached by these benefits, leading to exclusion errors) and low adequacy (the level o f benefits i s low, leading to inadequate protection against income vulnerability). The Guaranteed Minimum Income is performing well (one o f the best inthe region). Despite an absolute poverty rate o f 13.8 percent and a relative poverty rate o f 18.6 percent in2006, pointing to the need to sustain the program, there is evidence that the program's funding i s actually shrinking. As the economic growth will continue to liftout o fpoverty a part o fthe existing poor, the remaining ones will constitute real "poverty pockets". A shift inemphasis towards targeted programs should be considered to fight long-term, chronic poverty. 2 I1 Overview of the Social Protection System and its Overall Effectiveness 1. During recent years Romania made efforts to redistribute the benefits of growth by keeping constant the share of GDP devoted to social protection; still, the social protection expenditure per capita is the lowest in Europe. Romania redistributes about 10 percent of GDP via social protection programs. During 2004-2007, the share o f social protection transfers in GDP was remarkably stable, but relatively low when compared with other new EU members. In absolute terms, Romania has the lowest expenditure per capita on social protection', and much higher spending in the future does not seem very likely6, considering the increasingpressure to maintain a low budgetdeficit. At the same time, the system has one o f the lowest shares o f administration costs in total SP expenditure, o f only 1.4 percent, compared with the EU average of 2.9 percent. Figure 1: SocialProtection Spendingin Selected EUMember States Source ESSPROS, 2008 Social Protection Spending In Selected EU Member States -- 6 I"- T 120 0 100 20 0 - v) D- 80 fYI P 150 0 ? 3 c j 60 f L m 100 E I 40 f n p 5 0 20 Eak! 8 0 0 0 2. The social protection (SP) system in Romania, as inthe other countries inthe region, comprises two pillars: (i)social insurance (contributory benefits) and (ii)social assistance (non-contributory benefits). The social insurance benefits consist mainly o f pensions' for 5In PurchasingParity Standards(Social protection in the EuropeanUnion, Eurostat, 2008) 6 An increase in social protection spending of about 1.5 percent of GDP is expected on the pensions side, following the introductionofthe second pillar and the recent pensions increases. 7The pensions system is a classical Pay As You Go scheme. This section will cover the topic of pensions only in relationwith incomesvulnerability. 3 former employees or farmers' (for old age and disability) and their dependents (survivors), and unemployment benefits. The unemployment benefit i s set at 75 percent o f the minimum gross wage and i s granted for a period o f 6 to 12 months depending on the length o f service. Inaddition, school graduates unable to find employment are entitled for a period of 6 months to an allowance o f 50 percent o f the minimumgross wage. Duringrecent years the spending on these transfers (pensions and unemployment) reached on average about 5.8 percent o f the GDP, resulting in a relatively low adequacy o f benefits by the region's standards', but at the same time avoiding potential disincentives to work (in the case o f unemployment benefit) and sustainability challenges to the public pensions scheme. 3. The social assistance system includes a number o f cash and in-kind benefits, and services. B y and large, the social assistance cash benefits system in Romania comprises five main pillars: (i)children and family, (ii)disability and illness (not analyzed in this report), (iii)housing utilities (Le., heating allowances), (iv) last resort income support (Le., Guaranteed Minimum Income - GMI), and (v) "merit-based" benefits (Le., allowances for war veterans, for heroes, etc.). In absolute terms, the expenditure on the main social assistance benefits i s amongst the lowest in EU, while as share in GDP it reflects low effort compared with the magnitude o f poverty. Figure2: Spending on Main Social AssistanceBenefits in SelectedEUMember States (2005) Source: ESSPROS2008for social assistancespending, World Bank staff estimatesfor poverty Spendingon Main Social Assistance Benefitsin SelectedEU Member States (2005) 50 45 3 `O c 35 N 2 5 E 30 2 Y !? ; 2 : ; e! 25 :: ; 1 5 20 15 EP 1 10 H 0 5 5 0 0 Bulgana Estonia Hungary Lithuanie Lahla Poland Romania Slovenia EU27 4. Compared with the EU average, Romania has a good mix of targetednon-targeted social assistance programs, but the relatively high number of programs, the low adequacy, 8The farmer pensionsare currently paid out ofthe state budget 9The ratio average pension-average wage is about 0.6 in EU, on average, compared with 0.4 in Romania (see Appendix 2) 4 and the heterogeneity of the eligibility thresholds/ criteria of different benefits translate into a rather fragmented and difficult to monitor system of social assistance benefits. The total number o f social assistance benefits i s rather high (over 3 9 , comprising a mix o f categorical, income/means-tested (targeted"), and "merit" based schemes. Although significant steps towards consolidation (including the piloting o f the Unique Payment Agency), and towards a "Life course framework" approach were made, the system still has to be improved. Most o f the social assistance benefits have a low adequacy, representing 10-20 percent of the minimum wage (see Appendix 2). The low benefit levels together with the system fragmentation are probably increasing self-targeting, but also increase the transaction costs (including information, time spent to apply, etc.) for the poor. 5. The share of targeted benefits in the total expenditure on non-contributory benefits represents more than 25 percent, which may seem low, but i s higher than the EU27 average (20 percent in 2005). Although there is no legislation regulating the link between the eligibility thresholds for the targeted (income/ means tested) benefits and the minimumwage, there i s evidence that for each program the thresholds were kept relatively constant, but the levels o f these thresholds differ from one program to the other. Thus, in the case o f family benefits the threshold was stable over the years at 50 percent o f the minimum wage per capita, and inthe case o f the heating subsidies at a maximum 90 percent, respectively. Inthe case o f Guaranteed Minimum Income (GMI), the threshold is much lower, below 30 percent o f the minimum wage per household member, and in 2007 its level relative to the minimum wage decreased. 6. Overall, Romania's social protection system continues to have an extensive coverage, reaching directly or indirectly about 85 percent of the population, and covering about a quarter of an average household's net income. The Household Budget Survey data shows that, in 2006", 82 percent of the households (meaning 85 percent o f individuals) received at least one social protection benefit, half o f them receiving two or more benefits. The share o f SP beneficiaries is significantly higher in rural than in urban areas (88 percent, respectively 78 percent) mainly due to the farmer pensions, which are specific to rural areas. The benefits with the highest coverage are pensions, in particular the old-age pension (41 percent), family allowances (38 percent), in particular the child allowance (37 percent), and social benefits inkind (20 percent). 10Through the section we refer to income/meanstested benefits as "targeted benefits". The categorical targeted benefits will be referredto as "categorical benefits". IIThe last available survey wave 5 Table 1: Households coveragewith social benefits 2004 2005 2006 Urban Rural Total Urban Rural Total Urban Rural Total contributory social protection hpnpfitr 49.8% 62.6% 55.4% 49.5% 61.1% 54.5% 41.8% 60.3% 53.2% old age pension 35.0% 32.4% 33.9% 34.2% 32.2% 33.4% 34.0% 3 I.O% 32.7% disability pension 9.9% 8.3% 9.2% 1 1.O% 8.5% 9.9% 10.3% 8.3% 9.4% survivor pension 4.6% 11.3% 7.6% 4.4% 11.1% 7.3% 4.4% 10.7% 7.1% social assistance pension 0.4% 0.4% 0.4% 0.3% 0.6% 0.4% 0.2% 0.4% 0.3% farmer pension 1.5% 28.5% 13.4% 1.7% 26.4% 12.5% 1.3% 25.7% 11.9% war veterans (including survivor) pension 0.2% 0.8% 0.4% 0.2% 0.4% 0.3% 0.1% 0.3% 0.2% unemploymentbenefits 4.0% 2.2% 3.2% 3.0% 2.0% 2.6% 2.0% 1.8% 1.9% redundancypayments 0.8% 0.2% 0.5% 0.7% 0.2% 0.5% 0.3% 0.2% 0.3% noncontributory social protection benefits 52.3% 51.0% 51.7% 52.5% 50.5% 51.6% 52.3% 50.2% 51.4% family allowances 40.0% 38.4% 39.3% 39.0% 38.2% 38.7% 37.4% 37.9% 37.6% child allowance 39.8% 38.2% 39.I% 38.8% 38.I% 38.5% 37.1% 37.7% 37.3% income-testedfamily allowances 1.8% 8.0% 4.5% 2.7% 13.1% 7.2% 2.0% 11.7% 6.2% child care leave'/ child raising benefit 2.0% 0.9% 1.5% 2.6% 1.2% 2.0% 3.2% 1.8% 2.6% allowances for disabled I.6% 3.1% 2.3% 2.1% 3.0% 2.5% 2.0% 3.3% 2.6% GuaranteedMinimum lncome 1.3% 6.6% 3.7% 1.3% 6.6% 3.6% 1.2% 6.2% 3.3% housing utilities allowances 6.4% 1.6% 4.3% 7.4% 2.2% 5.1% 7.9% 3.0% 5.8% scholarships 0.8% 0.6% 0.7% 0.8% 0.5% 0.7% 0.7% 0.6% 0.7% allowances for war veterans I.8% 5 2% 3.3% 1.5% 4.2% 2.7% 1.3% 3.4% 2.2% allowances for subjectsof political persecution 0.7% 0.5% 0.6% 0.5% 0.5% 0.5% 0.6% 0.5% 0.6% allowances for heroes, martyrs and their heirs 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% in kind social benefits 18.6% 17.3% 18,0% 19.7% 18.4% 19.1% 2 I.3% 18.7% 20.2% subsidired medicines 7.6% 3.6% 5.8% 8.9% 3.6% 6.6% 11.0% 4.7% 8.3% bread and milk in school 7.5% 11.0% 9.0% 7.2% 11.7% 9.2% 6.7% 11.5% 8.8% other in kind social benejts 5.9% 4.0% 5.1% 6.6% 4.7% 5.8% 6.9% 4.1% 5.7% other social assistance 0.4% I.3% 0.8% 0.4% 0.9% 0.6% 0.2% 0.6% 0.4% any social protection benefits 80.1% 89.1% 84.1% 79.3% 88.4% 83.3% 17.7% 87.5% 81.9% * paid from the social insurancefund until 2006 Source: Romania Household Budget Surveys, authors' calculations, 6 7. As compared with 2004, 2006 registered a slight decrease in the coverage of social benefits, mainly due to the decrease in coverage of contributory benefits. However, the survey data shows that the coverage provided by the system remained generally stable, with small fluctuations o f 1 to 2 percentage points. A relatively stable trend i s also observed with respect to the share o f social benefits inthe average household's income. The pensions' share inthe households' income remained at an average of about 19 percent, while the other social transfers recorded a slight increase, more visible in the rural areas, due to a decrease in the share o f self-produced food (which has decreased with about 4 percentage points since 2004, being replaced by cash income from employment and social protection). The non- contributory benefits have a share of almost 7 percent of the total population's net incomeI2, the most important transfers being the family benefits (3.3 percent) and the in kind benefits (1.5 percent). Figure3: Shares of SP Benefits in the Net Income Source: Romania Household Budget Surveys, authors' calculations Shares of SP benefits in the net income &I non-agnculturalselfemploymeni mcash incomefrom agnculture 0other socialtransfers VI in kind incomefrom agnculture mpensions 1 Urban Urban Urban Rural Rural Rural Total Total Total 2004 I2005 12006 I2004 1 I ~ 2005 ZOO6 2004 ~ 2005 ~ 2006 ~ 8. The overall system of social protection benefits has good coverage of the poor, but some of the most vulnerable groups are less likely than others to be covered by adequate benefits. The social protection benefits (contributory and non-contributory) cover almost 90 percent o f the poorest decile" (Table A5.1), 100 percent of the poor pensioners, and almost all poor families with children and elder households. Rural households are slightly better covered than urban households, although poor farmers, one o f the most vulnerable categories identified by the 2007 Poverty Assessment, are the least covered (83 percent). Roma households, another category identified as having a very high risk of poverty, are well covered (90 percent). The adequacy of the SP benefits taken together i s relatively good, l2The figures presentedin this paragraphare computed as national"averages" (for an averagehousehold), and not only for beneficiaries.The estimationsrepresentthe share of total benefits in total populationincomes. 13The poorest I O percent of population 7 ensuring on average 50 percent o f the consumption o f poorest beneficiaries. In the case o f poor elderly and pensioners, the share goes up to 70 percent, while for the unemployed, poor farmers, poor families with children, and Roma households it represents only about one third. Compared with 2004, the adequacy o f benefits increased for pensioners and decreased slightly or remained constant for most o f the poor. As expected, only 12 percent o f the total social protection spending reaches the first q~intile'~, while half o f the funds go to the fourth and fifth quintile, due to the large share o f pensions inthe total social protection benefits. The poorest decile o f population gets only about 5 percent o f the total SP funds, while poor farmers get 1 percent and poor families with children get 3 percent. 9. The pensions have a good coverage of the poor elderly, but this type of social protection is likely to decrease in rural areas according to the trend in the number of farmer pension beneficiaries. The social insurance pensions cover directly or indirectly (through beneficiary household members) 41 percent o f the total population, and 61 percent o f the poor elderly (Table A5.2). Because o f their link with previous contributions from wages, more than half o f the social insurance pension benefits go to the wealthiest quintiles (fourth and fifth), while only 9 percent o f the pension benefits reach the low-income quintile. However, social insurance pensions offer a good protection to the poorest beneficiaries, by covering on average 60 percent o f their consumption. 10. Compared with the social insurance pensions for the former employees, the farmer pensions have lower coverage (11 percent o f population, respectively 5 1 percent o f poor elderly) and adequacy (20 percent o f beneficiaries' consumption, and less than 40 percent in the case of poor) but are more progressive (60 percent of the funds reaching the poorer, first and second, quintiles). Farmer pensions cover about 20 percent o f the rural poor, and one third of their consumption. However, the number o f beneficiaries decreased tremendously as compared to 2004 (Appendix 2), and it i s likely that in the near future the (poor) elderly coming from the agriculture sector be left without any protection against income vulnerabilities associated with aging (Le,, because most o f the current individual farmers are not contributing to pension fund). 11. The total social safety net benefit^'^ are not progressive, and offer only a modest protection to the poor against income vulnerability. One would expect that the benefits other than pensions (Le., unemployment and social assistance benefits), taken together, would be more progressivelyi6 distributed. The 2006 survey data contradict this expectation, showing that, overall, these benefits cover about 70 percent o f the poorest population (Table A5.4), but only 17 percent o f their funds reach the poorest quintile, while half o f the funds go to the rich quintiles.This happens mostly because o f the non-targeted family benefits and in- kind social assistance benefits. The graphic representation o f the concentration curves shows that the means/ income-tested benefits lie above the equality line (diagonal), meaning that most o f their funds go to the poorer segments o f population, while the in-kind benefits curve lies below the diagonal, meaning that a higher share o f these benefits go to non-poor. The non-targeted family benefits curve i s close to the equality line, meaning that these benefits are distributed relatively even between different income groups, and the same situation can be observed for the total social safety net benefits. 14The poorest 25 percent of population IsWe refer to the total social safety net as beingcomposedof social assistance and unemploymentbenefits. l6A progressive benefit is a benefitthat has a higher share o f funds transferred to the poor than to non-poor 8 Figure4: Concentrationof selected benefitsinconsumption, 2006 Source: Romania Household Budget Survey, authors' calculations Concentration of selected benefits P N 0 0 .2 .4 Percentiles(p).6 1 45' line other benefits than pensions GMI and targeted family benefits non-targetedfamily allowances in kind social benefits 12. Together, the unemployment and social assistance benefits provide a relatively good coverage o f the vulnerable population, especially to the poor families with children (98 percent) and Roma (84 percent), but a modest protection against income vulnerability, the share o f consumption covered by these benefits being less than 30 percent for the poorest beneficiaries. The social safety net succeeds to get out of poverty about 20 percent o f the pre- transfer poor'7, and to reduce the (pre-transfer) poverty gap by 24 percent, but at a very high cost: 13 RON spent for each 1 RON reduction in the poverty gap (not taking into account the administrative costs). 17Those beingpoor before receivingthe benefit 9 Table 2: Coverage of the poor with social protection benefits Source: Romania Household Budget Surveys, authors' calculations 2004 2005 2006 any type of benefits no benefit 9 9 11 one benefit 31 28 31 multiple benefits 61 62 58 contributorybenefits no benefit 53 55 59 one benefit 36 34 32 multiple benefits 12 11 10 non-contributorybenefits no benefit 27 26 29 one benefit 33 28 28 multiple benefits 40 46 44 13. After all transfers, thepoor are better covered than the non-poor, but 11percent of them are practically excludedfrom the system. Moreover, a high share (29 percent) of the poor is not reached by any social assistance (non-contributory) benefits. Together, the main benefits targeting the poor (the last resort income support and the income-tested family allowances) leave out 60 percent o f the rural poor and 77 percent o f the urban poor respectively. Even if their coverage and targeting performance seem to improve over the last 3 years, their adequacy i s decreasing, making them less effective in protecting the poor against income vulnerability. IV Effectiveness of the M a i n Social Assistance Programs 14. The Guaranteed Minimum Income (GMI) is well targeted, but suffers from low coverage of thepoor, due in large part to limitedfunding. The GMI (0.1 percent o f GDP in 2007, down from 0.2 percent in 2004) i s a last resort income support scheme, being a mix between Verified Means Test (VMT) and Self-Targeting (ST). The benefit level i s a differential one, being calculated against a threshold established function o f family size. The family i s thus entitled to social assistance equal to the difference between the GMI threshold and their actual income from all other sources, including the imputed income from assets such as land and animals. The existence o f a working member increases the benefit entitlement by 15 percent. The eligibility threshold incorporates a relatively flat equivalence scale and i s indexed on a yearly basis (see Appendix 3). The scheme assumes a two tier testing system: an administrative bureaucratic testing o f personal income, based on self- reported income statements (including imputed income from assets such as land and animals), and a verification o f means procedure, based on social inquiries at the claimant's domicile (VMT). In addition, the scheme includes a community work requirement for those 10 able to work (ST). A family is entitled to receive GMI as long as it satisfies the legal requirementdcriteria. The program i s administered by local government units and eligibility i s determined at the municipal level according to criteria defined by the methodological norms issued by the Ministry of Labor, Family and Equal Opportunities (MLFEO). By 2006 the criteria were defined at a relatively general level and the local governments were responsible for determining the imputed income from land and other assets. In 2005, following ajoint evaluation of the program done in 2003 by the MLFEO, DFID and World Bank, the legislation was improved, ensuring, amongst other things, more horizontal equity with respect to the income imputation procedures. The GMI funding is provided to the local government units from the State Budget, through the County Councils. Thus, the funds allocation betweenlocalities is done at the sub-national level. 15. The GMI succeeds to transfer 45 percent of its funds to the poorest 10 percent of Romanians, having the best targeting performance of the Romania social safety net programs. Relative to the performance of similar programs in the neighboring countries, it has a high coverage (16 percent of the poorest quintile, respectively 22 percent of the poorest decile), a moderateadequacy (30 percent of the consumption of poor beneficiaries), and good targeting (66 percent of funds to the poorest quintile). The program reaches mostly the rural poor (especially poor farmers) and poor large households (especially poor families with children), and covers almost one third of their consumption. Despite the (by design) discretion of the local governments to introduce additional eligibility criteria, and of the county councils with respect to funds allocation between local governments, the program does not seem to be significantly affected by horizontal inequities (i-e., households with similar poverty status located in different regions, and having different probabilities of entitlement). Even before the legislative/ procedural adjustments in 2005, the territorial distributionof the program participation correlated well with poverty in most of the counties (see map in Appendix 6). The currently available data do not allow for a detailed updated analysis of the geographical distribution, but by and large the program participation and funds allocation seem to be well correlated with the geo raphic distribution of poverty. coverage, which points to significant exclusion error^'^ (Le., more than 75 percent of the Although the scheme also suffers from inclusion errorsI! , more concerning is its low poorest decile do not participate in the program). Overall, the program is taking out of poverty only 3 percent of the number o f pre-transfer poor, but reduces the poverty gap by 9 percent with a very low cost compared with other programs: 3 RON for each 1 RON reduction of the poverty gap (not taking into account the administrative costs2'). 18Meaningnon-poorhouseholds/ individualsthat are included in the program and receivethe benefit. 19Meaningpoor households/ individuals that are not participatingto the program (are excluded from receiving the benefit) 2oThe administrativecosts o f GMI were estimated at about 11% of the cash transfers in 2005, being borne in proportionof 97% by the local governments (ECA TargetingPerformance, WB, Romaniacase study). 11 Figure5: Performanceof the maintargeted program Source. Household Budget Surveys, authors ' calculations o 2 4 0 8 IO 12 i 4 la coverageof the 1st qutntrts 16. Relative to the considerable spending effort on family allowances, their performance in reducing poverty is weak. The family allowances represent the most important type o f benefits (both in terms o f spending and coverage), comprising four main programs (complemented by other, smaller, schemes): a) the "universal" child allowance for children up to 18 years old, which was until recently a conditional cash transfer, the conditionality (school participation) being removed in 2007; b) the complementary family allowance, which is an income tested allowance for families with children introduced in 2004; c) the single parent allowance, also income-tested, introduced in 2004; and d) the child-raising allowance, formerly called "child care leave" and paid from the social insurance fund only for employee mothers with children under 2 years old; the program was transferred in 2006 to the state budget, and transformed into a Beveridge type scheme (flat, not linked to contribution), and in 2007 was split into two allowances: a "universal" benefit paid to all mothers (both employees and non-employees) until the child reach the age o f 2 (the child allowance for children under 2), and a benefit for employee mothers (child raising allowance). All allowances are indexed on a yearly basis (see Appendix 3), and consist o f fixed amounts per children in the case o f universal child allowances, or variable amounts taking into account the number o f children (Le., using an implicit equivalence scale) in the case o f targeted family benefits. The spending on these benefits amounted to 1 percent o f GDP in 2007, the highest share going to the "universal" child allowance (0.5 percent of GDP), followed by the child raising allowances (about 0.4 percent o f GDP) and income- tested family benefits (0.1 percent o f GDP). 17. Although the primary objective o f the non-targeted family benefits (child allowance and child raising benefit) is not necessarily poverty reduction, they are clearly part o f the policy mix aimed at addressing the manifold dimensions o f children vulnerability and poverty. Relative to the considerable spending effort (1 percent of GDP) on these benefits, their performance inreducing poverty is weak. Despite their very good coverage (97 percent 12 of poor families with children) their adequacy is low (11 percent in the case of poor families with children), and most of their funds are going to households that would not become poor inthe absence of transfers (53 percent of funds to the fourth and fifth quintiles). As opposed to the targeted family benefits, most of the funds of the non-targeted ones reach the urban population (62 percent) probably due to the link of the child raising allowance to employment. Without the "universal" child allowances, the number of poor would increase by 7 percent (one percentage point increase of the poverty rate), and the poverty gap by 9 percent, but this result i s achieved with a high cost: 17 RON spent (without administrative costs) for a reduction of the poverty gap of 1RON. 18. As in the case of the GMI, the income-tested family allowances have a pro-poor distribution, but their performance is lower with respect to both targeting (24 percent of funds transferred to the poorest decile) and adequacy (the transfers cover on average 9 percent of the poor beneficiaries' consumption). The lower targeting performance (and consequently higher inclusion errors) relative to the GMI is explained by the more generous eligibility threshold, but also by the absence of the self-targeting mechanism.2' The benefits reach22 percent of the total number of families with children and 43 percent of poor families with children. However, their performance inprotecting against income vulnerability is very low: their share in the consumption of the beneficiary poor families with children is only 8 percent. 19. The heating allowances program is affected by both exclusion and inclusion errors. The heating allowances (0.2 percent of GDP in 2007) are the second benefit in terms of coverage, being an income tested benefit granted for a period of maximum 5 months during the cold season (November to March). By 2007 the scheme was inequitable, using "double standards": those utilizing wood or coal for heating (mostly rural population) had access according to a more restrictive income threshold (only if they were beneficiaries of the Guaranteed Minimum Income) than those using natural gas or district heating. In 2007 this inequity was remedied by introducing a unique threshold for any type of heating allowances22.Until 2007 the heating allowances were paid as fixed amounts, function of the households' income per capita (different levels of the benefit function of the category of incomes) and type of heating system. Starting with 2007 the benefit level for the district heating allowance is correlated with energy consumption (see Appendix 3 for details). 20. As mentioned above, until 2007 the heating allowances were addressed mostly to the urban population (because of the different eligibility criteria used for different types of heating systems). The 2006 survey data confirms this urban "bias" of the program, showing that almost 75 percent of the funds were distributed in urban areas, and reached mostly the middle income groups, especially employees and pensioners. Given its objectives (protecting the vulnerable population against steep increases inthe price of heating and against seasonal increases in the cost of housing utilities) the program has a good adequacy, especially in the case of the poor (covering 15 percent of the poor beneficiaries' consumption). However, its coverage is low for the poor: according to the Household Budget Survey data only 10 percent *' Inaddition, there is anecdotic evidence that the verification of the incomes in the case of family allowances is not so rigorouslyimplemented and enforced. 22 Although, given the difference in regional prices and the high share of in kind incomes in rural areas, one would expect this solution to create some inclusionerrors. 13 of urban poor participatedto the program in 2006. At the same time, the urban poor report in proportiono f 40 percent not being able to cope with heating expenses. 21. The in-kind benefits taken together are strongly regressive. In addition to the main types o f cash benefits described above, the non-contributory benefits also comprise in-kind social benefits (Le., school meals - the "bread and milk" program -, subsidies for transportation, etc.), reviewed only briefly in this paper, with focus on two them: (i)school meals, which is a program aiming to provide a meal to every pupil attending primary education (grades 1-4), and (ii)medication subsidies. 22. The aggregate impact o f the in kind benefits is strongly regressive, 75 percent o f the funds beingtransferred to the rich quintiles. The survey data show that this type o f transfers has a strong urban "bias" too, with almost 80 percent o f funds going to the urbanpopulation. The main in kind transfers captured by the Household Budget Surveys are the subsidies for medicines, the school meals (the "bread and milk" program), and several other types o f subsidies (transportation, etc.), o f smaller magnitude, for specific categories o f population. Overall, in 2006 the in kind benefits have reached 24 percent of the population, and cover 7 percent o f the beneficiaries' consumption. The poorest decile o f the population i s covered to the same extent (23 percent) but gets only 3 percent o fthe total funds spent. 23. The medicines subsidies have an even worse performance, reaching only 2 percent of the poorest, to whom 1 percent of the total funds are transferred. The survey data reveal that the main beneficiaries o f this program are the pensioners and the elderly but not the poor ones. At the same time the program has an uneven regional distribution, with most o f its funds going to Bucharest and the Southern region and in particular to urban areas. By contrast, the school meals program, although not a targeted one, covers about 35 percent o f the poor families with children, and transfers most o f its funds to the poorer regions (Table A5.13). IV Moving closer to the social inclusion common objectives review of key issues - 24. The "spillover" of the social assistance cash transfers increased, and their performance in covering the poverty gap weakened. Romania has an extensive system o f social protection benefits, with relatively good performance in protecting the poor. Still, some o f the poor are excluded from any type o f social transfers. Moreover, some o f the most vulnerable groups, poor farmers and poor families with children, are less likely to be covered than others with adequate benefits. Over the past years Romania has made efforts to redistribute the benefits o f growth by keeping constant the share of GDP devoted to social protection. However, most o f these efforts were directed towards programs that only marginally benefit the poor, and as a result the "spillover" o f social assistance cash transfers increased, and their Performance incovering the poverty gap weakened.23 23 We are not suggesting that all social assistance programs should have poverty reduction as their primary explicit objective. Some o f these programs aim to support categories of population considered by society as deserving assistance based on the solidarity principle (e.g., families with children), or being in need for assistance to prevent social exclusion (e.g., the disabled). However, the data is showing that the schemes targeting the poor are crowded out by other types o f benefits which do not answer the problem o f poverty risk, which is one of the multiple dimensions of social exclusion. 14 Figure6: Performanceof SocialAssistance (SA) Cash Transfers in Reducingthe Poverty Gap Source: Romania Household Budget Suwrys, authors' calculations Performanceof SocialAsststance(SA) cashtransfers in reducingthe Poverty Gap 1 TotalSA spending 2004 2005 2006 1E8 SocialAssistance cash transfers spillover HPoverty Gap after transfers 0 Portion of the Poverty Gap covered by social assistance cash transfers".., - ~- -- ' --II- 25. The total cash non-contributory benefits are rather neutral to income inequality. The picture does not look much better from the inequality perspective either. Despite the high progressivity o f the targeted benefits, as indicated by their concentration coefficients (Table 3), the total cash non-contributory benefits are rather neutral to income inequality: the meansiincome-tested benefits together with the allowances for the disabled reduce the income inequality by about 1.4 percent, but their effect i s counterbalanced by the other cash non-contributory benefits. When including the in-kind benefits, the overall distributive impact o f the social assistance transfers i s rather slightly regressive. As shown in Table 3, the major factor in reducing income inequality are the taxes, which contribute about 24 percent to inequality reduction (down from 25 percent in 2004, before the income tax reform - see Appendix 4). 15 Table 3: Decomposition of the Gini index by income sources, 2006 Income Concentration Absolute Relative share index contribution contribution gross wages 0.6308 0.4875 0.3075 0.9184 gross income from agriculture 0.1778 0.1034 0.0184 0.0549 gross income from self-employment, non- agriculture 0.0382 0.2486 0.0095 0.0284 gross pensions 0.1919 0.2640 0.0507 0.1513 unemployment benefits 0.0062 0.0500 0.0003 0.0009 targeted family benefits 0.0024 -0.5845 -0.0014 -0.0042 other family benefits 0.0303 0.0978 0.0030 0.0089 disability allowances 0.0040 -0.0337 -0.0001 -0.0004 Guaranteed Minimum Income 0.0045 -0.6592 -0.0030 -0.0088 housing utilities allowances 0.0019 -0.0873 -0.0002 -0.0005 school meals 0.0016 -0.2586 -0.0004 -0.0012 other in kind social assistance 0.0134 0.5969 0.0080 0.0239 other social transfers 0.0037 0.3 154 0.0012 0.0034 gross income from capital 0.0050 0.7614 0.0038 0.0114 other income 0.0394 0.4533 0.0178 0.0533 taxes and contributions -0.1510 0.53 14 -0.0803 -0.2397 Total 1.oooo 0.3349 1.oooo Source: Romania Household Budget Survey, authors' calculations 26. The spending on targeted programs decreased relative to GDP and so did the adequacy of these benefits. Restoring the spending on anti-poverty programs, and increasing the access of the poor to social protection by expanding the well performing programs (e.g., GMI) and/ or adjusting the ones that are not performing so well, would help Romania to move closer to the first common objective for social protection and social inclusion24. 27. Increasing the coverage of targetedprograms by restoring theirfunding could help preventing further income shocks for the poorest, triggered by the ongoing food and energy price hikes. Although Romania i s not significantly exposed to the current food price crisis, it i s likely that the urban poor are to some degree exposed to the increases in food prices, and at the same time they are very exposedto the hikes inenergy prices. 28. Improved monitoring and evaluation of the social protection programs is needed. As the economic growth will continue to lift out of poverty a part of the existing poor, the remaining ones will constitute real "poverty pockets", difficult to identify and reach in the absence of a strengthened monitoring and evaluation system. As poverty in Romania is shallow, further reJinements of the targetedprograms are likely to be needed to ensure a good outreach of the poor. The Social Observatory, if carefully designed and implemented following the best practices in the EU countries, would most likely represent the most appropriate approachto address the current monitoring and evaluation gaps. 24 Le., "open social cohesion, equality between men and women and equal opportunities for all through adequate, accessible, financially sustainable, adaptable and efficient social protection systems and social inclusion policies" (EU Method o f co-ordination for social protection and social inclusion). 16 APPENDIX1.kfETHODOLOGICAL ASPECTSOF THEBENEFITINCIDENCE ANALYSIS In view of assessing the incidence o f pension benefits, the population is ranked into quintileddeciles based on the consumption aggregate. In the case o f other social protection programs, since one o f their implicit objectives is to offer temporary protection against poverty risk (related to temporary loss o f income, change in household structure, etc.), the ideal approach would be to identify the welfare status o f a household in the absence o f the government intervention and then to rank the individuals/ households on the base o f this counterfactual welfare indicator. To obtain unbiased estimates o f benefit incidence, one would compute a counterfactual consumption by subtracting the program benefits, and then adding the replacement income that the households would generate through their behavioral responses in the absence o f the intervention. A series o f studies2' seems to suggest that in several countries the share o f the replacement income would be around 50 percent o f the value o f the transfer. We tested the hypothesis o f a 50 percent replacement o f income for the (categorical) family benefits in Romania, using a panel data for 2001 and 2003, and found the hypothesis acceptable26.Thus, for the non-pension benefits, in this section we assume a replacement income o f 50 percent, and rank households based on the household consumption minus 50 percent ofthe transfers. While this estimate is not precise, the results presented are robust to the choice of a different share for the re lacement income, especially for transfers that are small compared to household consumptionP7, 25Ravallion (2000), van de Walle (2001; 2002) 26Usingthe following specification(vande Walle 2003): AC = a +P*AT +y*AX +A&(where C- consumption,T - transfer, X- household size, number of earners in the household, and average age of adults). The estimated confidenceintervalfor b was [0.4 1.31. - *'See also the 2003 RomaniaPoverty Assessment. 17 APPENDIX2. MAGNITUDE OF THEMAIN BENEFITS Table A2.1. Magnitude of the main social insurance benefits Number of beneficiaries (thousan&) Average benefit to the average net wage' 2004 2005 2006 2007 2004 2005 2006 2007 Former employees pension, total 4,597 4,611 4,633 4,643 0.4 0.4 0.4 0.4 Old agepension 3,052 3,036 3,028 3,038 0.5 0.4 0.4 0.4 Disabilippension 785 823 860 877 0.3 0.3 0.3 0.3 Survivorspension 642 627 614 601 0.2 0.2 0.2 0.2 Farmers pension 1,473 1,292 1,005 932 0.1 0.1 0.1 0.2 Unemploymentbenefits 225 215 179 129 0.3 0.3 0.3 0.3 for reference minimum wage (RON) 280 310 330 390 net averagewage (RON) 599 746 866 I043 * aulhor 'scomputationsha.& on M l J W and NIS data Table A2.2. Magnitude of the main social assistance benefits Number of beneficiaries (thousandspersons orfamilies, Average monthly benefit relative dependingon benefit type) to the minimum wage" 2004 2005 2006 2007 2004 2005 2006 2007 Child allowance 4,228 4,409 4,271 3,824 0 1 0 1 0 1 0 I Child allowance for children less than 2 y o 385 0 5 Child-raising allowance' 183 1 5 Complementaryfamily allowance 741 735 660 550 0 1 0 1 0 I 0 1 support allowance for single parentfamilies 240 250 250 210 0 2 0 2 0 2 0 2 Allowances for disabled (including personal assistants) 343 424 467 445 0 4 0 4 0 4 0 4 District heatingallowance 606 520 512 745 0 2 0 2 0 3 0 1 Naturalgas heatingallowance 403 520 602 850 0 1 0 2 0 3 0 2 Wood, coal, heatingallowance 407 390 2,502 0 1 0 1 0 1 0 I GuaranteedMinimum Income (GMI) 418 396 359 301 0 5 0 4 0 4 0 4 18 APPENDIX3. MAIN SOCIALASSISTANCEBENEFITS:LEVELS ELIGIBILITY THRESHOLDS AND Table A3.1. I 2004 I 2005 2006 I 2007 Benefit Eligibility Benefit Eligibility Benefit Eligibility level threshold level threshold level threshold ~~ Child allowance I 21 I - I-- 23 24 36 160 per - 34 168 per 176 per capita - 40 capita 42 capita - 45 47 - 50 52 160 per 50 168 per 52 176 per capita 59 capita 62 capita - 67 70 - 76 79 - 800 600 Allowances for disabled (including personal assistants) 113 112 122 166 I Min. 24 246 per Min. 280 per 500 per capita I capita capita District heating allowance 27 100 per Max. 110 per consumpt 125 per capita 223 capita ion capita 280 per 500 per capita capita Naturalgas heating allowance tI Max. 165 88 per Max. capita 185 Min. 10 capita Max. 83 100 per 125 per I capita capita capita 500 per G M I GMI Min. 14 capita Wood, coal heating allowance I 35 I bz%a 43 beneficia 48 beneficia r Y r Y Max. 46 125 per ry I capita Guaranteed Minimum Income ~~~~ @MI) 126 130 139 137 - single member family - 2 members 83 88 92 96 family 148 I 158 166 I73 - 3 members family Differenti 206 Differe 220 Differe 231 Differenti 241 - 4 membersfamily al 255 ntial 273 ntial 287 a l 300 - 5members family - each 304 325 341 356 additional member + 21 + 22 I I + 24 I +23 I minimum wage 280 310 330 390 average net wage 599 746 866 1043 19 APPENDIX4. DECOMPOSITIONTHE GINIINDEX OF BY INCOME SOURCES Table A4.1 Net Income 2004 2006 Income Concentration Absolute Relative Income Concentration Absolute Relative share index contribution contribution share index contribution contribution net wages 0 4404 0 4483 0 1974 0 6123 0.4820 0 4745 0 2287 0 6830 net income from agriculture 0 2168 0 1547 0 0335 0 1041 0,1778 0 1034 0 0184 0 0549 net income from self-employment, other than 0 0383 0 3356 0 0129 0 0399 0.0366 0 2340 0 0086 0 0256 agriculture net pensions 0 1907 0 2594 0 0495 0 1534 0,1913 0 2622 0 0502 0 1498 unemployment benefits 0 01I 3 0 1210 0 0014 0 0043 0.0062 0 0500 0 0003 0 0009 targeted family benefits 0 0022 -05117 -0 001I -0 0035 0.0024 -0 5845 -0 0014 -0 0042 other family benefits 0 0237 -00018 -0 0000 -0 0001 0 0303 0 0978 0 0030 0 0089 disability allowances 0 0041 -00150 -0 000I -0 0002 0.0040 -0 0337 -0 0001 -0 0004 Guaranteed Minimum Income 0 0056 -0 5635 -0 003I -0 0097 0.0045 -0 6592 -0 0030 -0 0088 housing utilities allowances 0 0014 -0 0870 -0 0001 -0 0004 0.0019 -0 0873 -0 0002 -0 0005 school meals 00018 -0 2359 -0 0004 -00013 0.0016 -0 2586 -0 0004 -00012 other in kind social assistance 0 0077 0 4481 0 0035 0 0107 0.0134 0 5969 0 0080 0 0239 other cashsocial transfers 0 0045 0 3088 0 0014 0 0043 0.0037 03154 0 0012 0 0034 gross income from capital 0 0074 0 8480 0 0063 0 0195 0.0050 0 761I 0 0038 0 0114 0 0441 0 4884 0 0215 0 0668 0.0394 0 4533 0 0178 0 0533 Total 100000 0.322428 I000000 I00000 0.334854 I000000 [-IDecompositionwith Rao'sapproach(1969) Source: Romania Household Budget Surveys, authors' calculations 20 Table A4.2 Gross Income 2004 2006 Income Concentration Absolute Relative Income Concentration Absolute Relative share index contribution contribution share index contribution contribution grosswages 0 5866 0 4718 0 2768 0 8584 0 6308 0 4875 0 3075 0.9184 gross income from agriculture 02168 0 1547 0 0335 0 1041 0 1778 0 1034 0.0184 0 0549 grossincome from self- employment, 0 0397 0 3425 0 0136 0 0422 0 0382 0 2486 0 0095 0 0284 other than agriculture gross pensions 0 191I 0 2605 0 0498 0 1544 0 1919 0 2640 0 0507 0 1513 unemployment benefits 00113 0 1210 0 0014 0 0043 0 0062 0 0500 0 0003 0 0009 targeted family benefits 0 0022 -0 51I7 -0 0011 -0 0035 0 0024 -0 5845 -0 0014 -0 0042 other family benefits 0 0237 -0 0018 -0 0000 -0 0001 0 0303 0 0978 0 0030 0 0089 disability allowances 0 0041 -0 0150 -0 0001 -0 0002 0 0040 -0 0337 -0 0001 -0 0004 Guaranteed Minimum 0 0056 -0 5635 -0 0031 -0 0097 0 0045 -0 6592 -0.0030 -0.0088 Income housing utilities allowances 0 0014 -0 0870 -0 0001 -0 0004 0 0019 -0 0873 -0 0002 -0 0005 school meals 0 0018 -0 2359 -0 0004 -0 0013 0 0016 -0 2586 -0 0004 -0 0012 other in kind social assistance 0 0077 0 4481 0 0035 0 0107 00134 0 5969 0 0080 0 0239 other social transfers 0 0045 0 3088 0 0014 0 0043 0 0037 0 3154 OOOl2 0 0034 gross income from capital 0 0076 0 8493 0 0064 0 0199 0 0050 0 7614 0 0038 0 01I 4 other income 0 0441 0 4884 00215 0 0668 0 0394 0 4533 0 0178 0 0533 taxes and contributions .O 1481 0 5437 -0 0805 -0 2497 -0 1510 0 5314 -0 0803 -0 2397 Total 10000 0.3224 10000 10000 0.3349 IO000 [-IDecomposition with Rao's approach(1969). Source: Romania Household Budget Surveys, authors calculations 21 APPENDIX5. EFFECTIVENESSSOCIAL PROTECTION BENEFITS OF Table A5.1 any social protection benefits - Adequacy Coverage(YO) Targeting(YO) (distribution of funds) (share of benefits in beneficiaries'consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 1 91 91 89 13 13 12 0.47 0.47 0.47 2 91 90 91 18 18 17 0.42 0.42 0.42 quintilesof consumption 3 90 89 87 22 21 21 0.38 0.38 0.40 4 87 85 85 24 24 23 0.33 0.35 0.36 5 78 76 74 23 25 26 0.23 0.26 0.28 Poorest decile 92 90 88 6 5 5 0.51 0.51 0.50 61 0.32 0.35 0.36 Area of residence Urban 84 83 81 59 60 Rural 91 91 90 41 40 39 0.33 0.35 0.37 Region North-Eat 89 88 87 15 15 15 0.31 0.33 0.34 South-Eat 86 86 83 12 12 12 0.33 0.34 0.36 South 90 89 87 17 16 16 0.34 0.37 0.38 South-West 89 87 87 10 10 10 0.33 0.36 0.37 West 85 83 83 9 9 9 0.33 0.35 0.34 North-West 88 87 87 12 12 12 0.30 0.33 0.34 Centre 87 85 84 12 12 12 0.33 0.35 0.36 Bucharest 81 82 80 12 14 14 0.36 0.38 0.39 HH headgender male 87 86 84 78 78 78 0.3I 0.33 0.35 female 89 89 88 22 22 22 0.39 0.41 0.43 employee 77 75 74 13 14 15 0.12 0.13 0.14 employer 78 75 68 0 0 0 0.07 0.09 0.11 self-employed non-agriculture 81 82 78 1 2 2 0.12 0.15 0.14 self-employed HHhead agriculture 84 83 82 5 6 5 0.25 0.26 0.26 occupationalstatus unemployed 88 88 89 5 4 3 0.34 0.34 0.33 pensioner 100 100 100 74 74 74 0.55 0.58 0.61 pupil, student 48 54 53 0 0 0 0.14 0.27 0.21 housewife 82 79 76 0 0 0 0.22 0.23 0.24 other 84 84 82 0 0 0 0.27 0.30 0.46 HH headage Less than 35 84 82 81 7 8 8 0.15 0.I 9 0.19 35-60 83 81 80 37 35 35 0.23 0.23 0.24 More than 60 99 99 99 56 57 57 0.58 0.61 0.64 Family with children 98 98 98 25 26 25 0.18 0.20 0.21 Rural poor 92 91 90 8 6 5 0.47 0.48 0.48 Urbanpoor 91 89 86 4 3 2 0.46 0.49 0.49 Poor family with children 98 99 98 5 4 3 0.37 0.38 0.37 Poor elderly 98 98 97 6 4 4 0.69 0.69 0.71 Poor farmer 86 86 83 2 2 1 0.34 0.35 0.32 Poor pensioner 100 100 100 7 5 5 0.67 0.69 0.71 Poor large household(more than 5) 96 95 93 5 3 3 0.38 0.40 0.38 Total 87 86 85 100 100 IO0 0.33 0.35 0.36 Source: Romania Household Budget Surveys, authors' calculations 22 Table A5.2 any social insurance pension for former employees - Adequacy Coverage (YO) Targeting(YO) (distribution of funds) (share of benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 1 37 37 33 9 9 9 0.52 0.52 0.56 2 46 47 48 17 17 17 0.50 0.51 0.50 quintilesof consumption 3 49 48 48 23 22 22 0.47 0.48 0.50 4 47 46 45 27 25 26 0.44 0.45 0.47 5 34 35 35 24 26 27 0.35 0.39 0.40 Poorest decile 33 32 27 4 3 3 0.55 0.55 0 59 Area of Urban 41 42 41 64 65 66 0.48 0.49 0.50 residence Rural 44 44 42 36 35 34 0.37 0.39 0.41 North-Eat 37 36 35 13 14 13 0.42 0.43 0.44 South-Eat 40 39 37 12 1 1 1 1 0.44 0.46 0.47 South 49 47 46 16 15 15 0.40 0.44 0.42 42 43 Region South-West 42 I O 9 I O 0.42 0.44 0.47 West 46 45 45 I O 10 10 0.45 0.47 0.46 North-West 44 45 45 13 13 13 0.40 0.42 0.45 Centre 40 41 39 12 12 12 0.45 0.46 0.49 Bucharest 45 47 45 14 15 15 0.51 0.50 0.52 HHheadgender male 39 39 38 78 78 78 0.45 0.47 0.48 female 59 59 57 22 22 22 0.39 0.40 0.42 employee 15 I 5 I 5 7 7 8 0.21 0.22 0.22 employer 9 1 1 13 0 0 0 0.22 0.18 0.16 self-employed I non-aericulture 9 1 1 1 0.22 0.20 0.24 HHhead self-Lmployed 18 17 16 3 3 3 0.34 0.35 0.34 occupational agriculture status unemployed 12 11 II 1 1 1 0.25 0.25 0.27 pensioner 89 90 90 88 88 88 0.49 0.51 0.53 pupil, student 7 7 5 0 0 0 0.23 0.34 0.33 housewife 12 13 16 0 0 0 0.25 0.33 0.23 other 16 1 1 12 0 0 0 0.23 0.34 0.35 Less than 35 y.0. 9 8 8 2 2 2 0.22 0.24 0.24 HHheadage 35-60 y.0. 33 32 31 34 32 31 0.34 0.35 0.35 More than 60 y.0. 84 84 84 65 66 67 0.52 0.54 0.57 Family with children 29 28 27 14 13 12 0.25 0.26 0.26 Ruralpoor 35 31 27 5 4 3 0.48 0.51 0.54 Urbanpoor 38 41 34 3 2 2 0.59 0.60 0.64 Poor family with children 27 26 19 2 1 I 0.36 0.36 0.38 Poor elderly 68 66 61 5 4 3 0.58 0.61 0.63 Poor farmer 14 11 8 1 0 0 0.46 0.46 0.47 Poor pensioner 78 79 72 7 5 4 0.55 0.57 0.60 Poor large household(more than 5) 36 33 25 3 2 1 0.36 0.36 0.37 Total 43 43 41 100 100 100 0.43 0.45 0.47 Source: Romania Household Budget Surveys, authors' calculations 23 Table A53 farmer pensions - Adequacy Coverage(YO) Targeting(YO) (distribution of funds) (share of benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 1 17 16 17 26 27 30 0.29 0.29 0.32 2 17 16 16 30 30 31 0.22 0.2I 0.23 quintilesof consumption 3 13 12 11 23 23 21 0.17 0.16 0.17 4 8 8 7 14 14 12 0.12 0.12 0.12 5 5 4 3 8 6 5 0.08 0.08 0.10 Poorest decile 16 15 16 12 13 14 0.34 0.36 0.39 Area of Urban 1 2 1 5 6 6 0.12 0.12 0.17 residence Rural 24 22 22 95 94 94 0.18 0.18 0.20 North-Eat 15 13 13 25 25 25 0.21 0.21 0.24 South-Eat 13 12 12 14 16 16 0.18 0.19 0.22 South 16 15 15 20 20 19 0.15 0.17 0.17 Region South-West 20 20 19 18 17 18 0.18 0.17 0.20 West 6 7 6 4 4 4 0.12 0.12 0.14 North-West 13 9 10 13 II I O 0.15 0.15 0.15 Centre 6 6 6 7 7 8 0.17 0.17 0.21 Bucharest 0 1 1 0 I 1 0.07 0.08 0.1I HHhead male I O 9 9 70 69 69 0.17 0.17 0.19 gender female 20 18 17 30 31 31 0.18 0.18 0.22 employee 2 I 2 2 2 3 0.06 0.07 0.09 employer 0 2 2 0 0 0 0.14 0.04 self-employed non- agriculture 3 2 3 I I I 0.09 0.09 0.08 HH head self-employed II II 11 I O II I O 0.18 0.17 0.18 occupational agriculture status unemployed 1 1 2 0 0 0 0.1I 0.08 0.09 pensioner 26 24 24 87 86 86 0.18 0.18 0.21 pupil, student 0 0 0 0 0 0 housewife 3 1 1 0 0 0 0.12 0.04 0.07 other 5 2 4 0 0 0 0.20 0.16 0.28 Less than 35 y.0. 2 2 1 I 1 1 0.09 0.10 0.10 HHheadage 35-60 y.0. 4 3 3 I O 8 10 0.10 0.10 0.11 More than 60 y.0. 35 33 32 89 91 89 0.19 0.19 0.22 Family with children 9 8 8 15 15 16 0.10 0.09 0.11 Rural poor 23 20 23 23 19 20 0.30 0.32 0.34 Urban poor 3 3 5 1 I 1 0.19 0.25 0.29 Poor family with children II I O II 4 3 4 0.17 0.16 0.20 Poor elderly 47 45 5 1 21 18 19 0.33 0.34 0.36 Poor farmer 9 9 6 3 2 2 0.26 0.26 0.29 Poor pensioner 37 34 44 21 17 19 0.31 0.33 0.35 Poor large household(more than 5) 14 14 15 5 4 4 0.16 0.16 0.19 Total 12 11 11 100 100 100 0.17 0.17 0.20 Source: Romania Household Budget Surveys, authors' calculations 24 Table A54 other benefitsthan pension - Adequacy Coverage (YO) Targeting(YO) (distribution of funds) (share of benefits in beneficiaries'consumption) 2004 2005 2006 2004 2005 2006 2004 200s 2006 1 74 13 71 19 18 17 0.23 0.23 0 22 quintilesof 2 68 68 67 18 17 16 0.14 0.14 0 I5 consumptionbefore 3 66 64 62 19 18 18 0.12 0.12 0 13 50% of transfer 4 63 63 63 19 21 20 0.09 0.1I 0 II 5 60 58 59 24 26 29 0.08 0.10 0 1 1 Poorest decile before50% of transfer 76 75 72 I O 9 9 0.29 0.28 0 29 Area of residence Urban 65 64 63 57 59 60 0.11 0.12 0 12 Rural 67 66 66 43 41 40 0.12 0.14 0 15 North-Emt 69 69 67 17 18 18 0.12 0.13 0 14 South-East 66 65 64 13 1 1 12 0.12 0.12 0 13 South 67 61 65 17 16 18 0.12 0.14 0 16 Region South-West 66 65 64 I O I O 9 0.11 0.13 0 13 West 64 60 60 8 8 8 0.10 0.11 0 II North-West 65 64 64 12 12 I 1 0.10 0.1I 0 II Centre 67 65 65 14 14 12 0.13 0.14 0 13 Bucharest 60 64 62 9 12 12 0.09 0.1I 0 1 1 HHheadgender male 67 66 65 82 81 81 0.1I 0.12 0 13 female 59 59 59 18 19 19 0.13 0.15 0 15 employee 72 70 68 33 35 37 0.08 0.09 0 I O employer 73 66 65 I I 1 0.05 0.08 0 08 self-employed non- agriculture 78 78 75 4 5 4 0.08 0.12 0 II self-employed HHhead agriculture 74 73 73 1 1 12 I O 0.15 0.17 0 17 occupationalstatus unemployed 86 86 85 16 13 I O 0.31 0.31 0 30 pensioner 52 52 53 32 32 35 0.13 0.14 0 I5 pupil, student 45 5 1 50 0 1 0 0.12 0.26 0 19 housewife 78 76 71 I 1 1 0.18 0.18 0 19 other 77 81 79 1 1 1 0.24 0.26 0 38 Less than 35 y,o, 82 80 79 25 27 26 0.13 0.16 0 17 HHheadage 35-60 y.0. 69 68 67 52 48 49 0.10 0.10 011 More than 60 y,o. 50 50 50 24 25 25 0.13 0.15 0 15 Family with children 98 97 97 59 61 61 0.11 0.13 0 13 Ruralpoor 73 73 12 I 2 I O 8 0.24 0.26 0 26 Urban poor 76 77 71 6 4 3 0.21 0.22 0 24 Poor family with children 9 1 98 98 13 I O 8 0.24 0.26 0 27 Poor elderly 56 55 54 4 3 2 0.21 0.21 0 22 Poor farmer 79 81 78 5 4 4 0.25 0.28 0 27 Poor pensioner 61 60 57 5 3 3 0.19 0.20 0 20 Poor large household (more than 5) 91 92 89 I O 8 6 0.22 0.24 0 24 Total 66 65 64 100 100 100 0.11 0.13 0 13 Source: Romania Household Budget Surveys, authors' calculations 25 Table A5.5 - means/ income-testedcash social assistancetransfers (targeted family benefitsand GMI) Adequacy Coverage(%) Targeting(%) (distribution of funds) (share of benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 1 29 34 32 57 55 59 0.23 0.19 0.19 quintilesof 2 14 19 16 23 24 23 0.12 0.10 0.09 consumption before 50% of 3 7 1 1 9 9 11 10 0.07 0.06 0.06 transfer 4 4 6 5 5 6 6 0.05 0.05 0.05 5 2 2 2 6 4 2 0.10 0.04 0.04 Poorest decile before 50% of transfer 35 39 38 36 33 38 0.28 0.25 0.25 Area of Urban 4 6 4 22 23 21 0.14 0.11 0.1I residence Rural 19 25 23 78 77 79 0.14 0.11 0.11 North-Eat 17 22 20 21 24 26 0.12 0.10 0.11 South-Eat II 15 12 15 13 12 0.16 0.12 0.10 South 12 17 15 19 17 18 0.15 0.10 0.10 Region South-West 18 20 20 18 17 17 0.13 0.11 0.11 West 7 6 5 6 4 5 0.16 0.13 0.14 North-West 9 14 11 9 11 I O 0.10 0.08 0.10 Centre I O 12 II 11 12 I 1 0.17 0.14 0.12 Bucharest 1 2 I 1 2 2 0.17 0.16 0.12 HHheadgender male 11 14 13 79 77 78 0.13 0.10 0.10 female 10 14 13 21 23 22 0.18 0.13 0.14 employee 5 7 6 I 2 I O 10 0.07 0.05 0.05 employer 0 3 1 0 0 0 - 0.06 0.02 self-employed non-agriculture 28 23 7 9 8 0.12 0.10 0.09 HH head self-employed 33 44 40 36 39 41 0.17 0.13 0.14 occupational agriculture status unemployed 29 28 31 21 I 5 18 0.25 0.21 0.21 pensioner 7 9 8 18 19 16 0.09 0.08 0.08 pupil, student 0 5 0 0 1 0 0.10 0.61 housewife 20 30 29 3 3 3 0.33 0.25 0.22 other 29 43 45 3 4 3 0.32 0.27 0.25 Less than 35 y.0. 18 23 19 30 31 28 0.15 0.13 0.14 HHheadage 35-60 Y.O. 11 14 13 55 52 55 0.14 0.10 0.1I More than 60 y.0. I 10 9 15 16 17 0.11 0.09 0.09 Family with children 21 28 25 76 77 77 0.13 0.10 0.10 Ruralpoor 34 42 40 42 37 37 0.23 0.21 0.21 Urbanpoor 20 27 23 13 10 9 0.25 0.22 0.26 Poor family with children 43 57 56 42 36 35 0.23 0.20 0.21 Poor elderly 18 21 23 8 7 8 0.19 0.17 0.18 Poor farmer 42 58 53 21 20 22 0.25 0.22 0.23 Poor pensioner 18 19 20 9 6 6 0.16 0.14 0.15 Poor large household(more than 5) 40 5 1 48 31 26 24 0.21 0.18 0.19 Total II 14 13 100 100 100 0.14 0.1I 0.11 Source: Romania Household Budget Surveys, authors' calculations 26 Table A5.6 income-tested family allowances - Adequacy Coverage(YO) Targeting(%) (distribution of funds) (share of benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 1 16 25 23 41 42 45 0.08 0.07 0.07 quintiles of 2 I O 16 14 28 28 27 0.06 0.05 0.05 consumption before 50% 3 6 I O 8 17 17 16 0.04 0.04 0.03 of transfer 4 3 5 4 9 9 8 0.04 0.03 0.03 5 1 2 2 4 4 3 0.03 0.02 0.02 Poorest decile before 50% of transfer 18 27 25 22 22 24 0.09 0.08 0.09 Area of Urban 3 4 3 22 22 19 0.06 0.05 0.05 residence Rural 13 21 19 78 78 81 0.06 0.05 0.05 North-Eat 13 19 17 32 29 29 0.07 0.05 0.05 South-Eat 8 12 I O 13 13 13 0.06 0.05 0.05 South 8 14 11 18 18 17 0.05 0.05 0.04 Region South-West 13 16 16 17 14 17 0.05 0.04 0.05 West 3 4 3 3 3 2 0.05 0.05 0.04 North-West 6 12 9 11 13 II 0.05 0.04 0.05 Centre 4 8 9 6 9 10 0.06 0.05 0.05 Bucharest 0 1 I 0 I I 0.05 0.06 0.04 HHhead male 8 12 II 84 81 83 0.05 0.05 0.05 gender female 6 11 8 16 19 17 0.07 0.05 0.06 employee 5 6 5 25 21 21 0.05 004 0.04 employer 0 3 I 0 0 0 0.03 0.02 self-employed non- agriculture 13 22 18 I O II I O 0.07 0.05 0.05 HHhead self-employed 21 36 33 34 35 37 0.07 0.05 0.05 occupational agriculture status unemployed 11 17 19 8 8 9 0.07 0.06 0.06 pensioner 5 8 6 22 22 20 0.04 0.04 0.04 pupil, student 0 0 0 0 0 0 housewife 7 18 13 1 2 1 0.08 0.07 0.06 other 8 21 18 I I 1 0.11 0.06 0.06 Less than 35 y,o, 12 20 16 33 32 30 0.07 0.06 0.06 HH head age 35-60 y.0. 7 II I O 53 52 54 0.06 0.05 0.04 More than 60 y.0. 5 8 7 13 15 16 0.04 0.04 0.04 Family with children 15 24 22 92 91 92 0.06 0.05 0.05 Ruralpoor 19 31 29 31 27 28 0.09 0.08 0.08 Urban poor I O 16 13 8 6 5 0.08 0.07 0.09 Poor family with children 26 45 43 35 30 30 0.09 0.08 0.08 Poor elderly 9 14 15 5 4 5 0.07 0.06 0.07 Poor farmer 25 45 39 17 15 16 0.10 0.08 0.08 Poor pensioner 12 15 16 9 6 7 0.07 0.07 0.07 Poor large household(more than 5) 24 40 36 26 21 20 0.08 0.07 0.07 Total 7 12 I O 100 100 IO0 0.06 0.05 0.05 Source: Romania Household Budget Surveys, authors ' calculations 27 Table A5.7 non-targeted family allowances(child allowance and child-raising) - Adequacy Coverage(%) Targeting (%) (distribution of funds) (share of benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 I 64 64 62 17 14 13 0.09 0.08 0.09 quintilesof 2 57 57 56 16 15 15 0.06 0.06 0.07 consumptionbefore 3 55 54 5 1 20 17 19 0.06 0.06 0.08 50% of transfer 4 52 51 49 20 23 25 0.05 0.06 0.08 5 49 46 46 28 31 28 0.04 0.06 0.06 Poorest decile before 50% of transfer 65 65 63 8 6 6 0.10 0.09 0.10 Urban Area of residence 54 52 50 61 63 62 0.05 0.07 0.07 Rural 57 57 56 39 37 38 0.05 0.06 0.08 North-East 60 58 57 18 18 18 0.05 0.07 0.08 South-East 56 55 53 12 12 14 0.05 0.06 0.08 South 56 55 52 15 15 16 0.05 0.07 0.08 South-West Region 56 56 55 9 9 9 0.04 0.06 0.06 West 54 51 50 8 8 8 0.04 0.06 0.07 North-West 56 55 54 16 14 13 0.06 0.06 0.07 Centre 55 53 52 14 14 12 0.06 0.08 0.08 Bucharest 46 48 46 9 I O 1 1 0.05 0.06 0.07 HHheadgender Male 58 57 55 87 87 85 0.05 0.07 0.07 female 44 44 43 13 13 15 0.05 0.06 0.08 employee 68 65 63 57 59 62 0.05 0.07 0.08 employer 68 62 61 I 2 1 0.03 0.07 0.05 self-employed non-agriculture 74 74 71 5 6 6 0.05 0.06 0.07 self-employed HH head agriculture 65 66 65 I O 10 8 0.06 0.07 0.07 occupational status unemployed 71 69 69 7 6 6 0.07 0.09 0.09 pensioner 34 34 33 18 17 17 0.05 0.05 0.06 pupil, student 24 26 24 0 0 0 0.04 0.05 0.06 housewife 68 65 64 1 1 1 0.07 0.07 0.07 Other 58 64 5 1 0 0 0 0.07 0.06 0.11 Less than 35 80 78 77 40 44 44 0.08 0.12 0.13 HHheadage 35-60 61 60 58 49 46 45 0.04 0.05 0.05 More than 60 30 30 29 I O 11 12 0.04 0.05 0.07 Family with children 96 96 96 89 91 92 0.06 0.08 0.09 Ruralpoor 63 63 62 I O 7 6 0.09 0.09 0.09 Urban poor 67 68 64 6 3 3 0.08 0.08 0.10 Poor family with children 96 97 97 14 9 7 0 I O 0.10 0.1I Poor elderly 39 39 38 2 I I 0.08 0.07 0.07 Poor farmer 70 74 70 4 3 3 0.09 0.09 0.09 Poor pensioner 47 47 44 4 2 2 0.07 0.07 0.07 Poor large household(more than 5) 86 88 85 10 7 5 0.09 0.09 0.10 Total 55 54 53 IO0 IO0 IO0 0.05 0.06 0.07 Source: Romania Household Budget Surveys, authors ' calculations 28 Table A5.8 Guaranteed Minimum Income - Adequacy Coverage(X) Targeting(YO) (distribution of funds) (share of benefits in beneficiaries'consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 I 11 17 16 64 63 66 0.31 0.30 0.30 quintilesof 2 6 5 5 21 21 20 0.19 0.19 0.19 consumptionbefore 3 2 2 2 6 7 8 0.12 0.14 0.15 50% of transfer 4 1 1 1 3 5 4 0.11 0.14 0.13 5 0 0 0 7 3 2 0.30 0.12 0.18 Poorest decile before 50% of transfer 23 21 22 42 40 45 0.35 0.35 0.34 Area of residence Urban 2 2 2 23 24 22 0.26 0.26 0.25 Rural 9 9 8 7 1 76 78 0.24 0.22 0.23 North-Eat 7 7 7 17 22 25 0.19 0.20 0.23 South-Eat 5 5 4 16 13 II 0.31 0.25 0.24 South 6 6 6 20 17 18 0.27 0.22 0.2I Region South-West 7 8 7 18 18 18 0.27 0.23 0.25 West 5 3 3 7 5 6 0.22 0.24 0.25 North-West 3 4 4 8 9 I O 0.24 0.22 0.23 Centre 7 5 4 13 13 1 1 0.23 0.27 0.28 Bucharest 1 1 1 1 3 2 0.20 0.26 0.20 HHheadgender Male 5 5 4 17 76 75 0.24 0.22 0.24 female 6 6 6 23 24 25 0.27 0.25 0.24 employee I 1 0 6 4 4 0.18 0.12 0.14 employer 0 1 0 0 0 0 - 0.11 self-employed non-agriculture 9 7 6 9 7 0.19 0.23 0.19 self-employed HHhead agriculture 18 19 18 37 42 43 0.25 0 22 0.25 OccupationalStatUS unemployed 21 18 21 26 19 24 0.32 0.31 0.30 pensioner 3 2 2 17 17 14 0.18 0.18 0.18 pupil, student 0 5 0 0 I 0 0.10 0.61 housewife 16 21 21 4 4 4 0.40 0.34 0.28 other 25 29 32 4 5 4 0.32 0.38 0.32 Less than 35 8 8 1 29 31 28 0.29 0.27 0.29 HHhead age 35-60 5 5 5 55 52 55 0.24 0.22 0.23 More than 60 3 3 3 16 17 17 0.22 0.21 0.21 Family with children 9 9 8 70 69 69 0.24 0.22 0.23 Ruralpoor 21 21 21 46 42 43 0.30 0.31 0.31 Urban poor 12 14 14 15 13 12 0.35 0.35 0.37 Poor family with children 25 27 28 44 39 38 0.31 0.31 0.31 Poor elderly I O I O I1 9 8 9 0.29 0.28 0.30 Poor farmer 27 30 28 22 23 25 0.30 0.30 0.3I Poor pensioner I O 7 7 9 6 6 0.22 0.25 0.27 Poor large household (more than 5) 23 24 24 33 29 27 0.29 0.29 0.29 Total 5 5 5 100 100 100 0.24 0.23 0.24 Source: Romania Household Budget Surveys, authors' calculations 29 Table A5.9 heating allowances - Adequacy Coverage (%) Targeting(%) (distribution of funds) (share of benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 I 3 4 4 15 13 11 0.14 0.15 0.15 quintilesof 2 5 6 8 26 23 24 0.12 0.11 0.12 consumption before 3 5 8 9 25 30 29 0.09 0.09 0.10 50% of transfer 4 4 6 7 21 20 22 0.08 0.07 0.07 5 2 3 3 13 13 13 0.06 0.06 0.06 Poorest decile before 50% of transfer 2 4 3 5 6 3 0.18 0.15 0.15 Area of residence Urban 6 8 8 81 79 74 0.09 0.08 0.09 Rural 1 2 3 19 21 26 0.10 0.10 0.10 North-Emt 4 5 5 19 16 16 0.11 0.10 0.10 South-Ekt 2 3 5 8 8 9 0.10 0.10 0.07 South 4 5 6 12 16 15 0.08 0.08 0.10 Region South-West 3 3 4 10 6 8 0.10 0.11 0.12 West 3 5 5 I 9 7 0.08 0.08 0.10 North-West 3 6 6 8 12 9 0.07 0.07 0.07 Centre 8 II 13 19 21 26 0.08 0.09 0.09 Bucharest 6 6 5 16 12 10 0.10 0.08 0.11 66 0.08 0.08 0.08 HH head gender male 4 5 5 59 68 female 7 7 8 41 32 34 0.12 0.11 0.12 employee 4 5 6 26 29 29 0.07 0.07 0.07 employer 0 0 0 0 0 0 self-employed non-agriculture 3 7 4 3 8 5 0.10 0.09 0.12 self-employed HHhead agriculture 2 3 2 5 8 4 0.13 0.11 0.12 Occupationalstatus unemployed 7 11 I 1 14 12 12 0.11 0.12 0.12 pensioner 5 5 I 46 41 46 0.09 0.09 0.10 pupil, student 9 3 10 1 0 1 0.10 0.13 0.09 housewife 14 13 6 4 2 1 0.14 0.09 0.14 other 4 2 13 1 0 2 0.11 0.22 0.26 Less than 35 3 6 4 12 18 I 1 0.10 0.09 0.08 HH head age 35-60 5 6 6 57 57 59 0.08 0.08 0.09 Morethan 60 4 4 6 31 25 30 0.1I 0.09 0.09 Family with children 4 6 6 34 43 36 0.08 0.08 0.09 Ruralpoor 1 2 1 5 3 1 0.16 0.14 0.15 Urban poor I 9 I O 9 6 4 0.15 0.15 0.14 Poor family with children 2 5 3 4 5 2 0.13 0.14 0.14 Poor elderly 4 1 4 4 I 2 0.14 0.14 0.16 Poor farmer 1 2 0 1 1 0 0.21 0.16 0.17 Poor pensioner 4 3 5 5 3 3 0.13 0.15 0.15 Poor large household (more than 5) 3 5 4 4 5 3 0.09 0.14 0.12 Total 4 5 6 100 100 100 0.09 0.09 0.09 Source: Romania Household Budget Surveys, authors' calculations 30 Table A5.10 unemployment benefits - Adequacy Coverage (YO) Targeting (YO) (distribution of funds) (share o f benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 1 3 3 3 11 I 5 18 0.41 0.44 0.40 quintiles of 2 5 4 3 25 25 25 0.32 0.30 0.30 consumption before 3 4 4 3 23 25 25 0.28 0.25 0.25 50% of transfer 4 4 3 2 23 21 18 0.23 0.21 0.2I 5 3 2 1 17 13 14 0.18 0.17 0 14 Poorest decile before 50% of transfer 2 3 3 4 6 8 046 0.47 0.43 Area of residence Urban 5 4 2 71 66 60 0.26 0.26 0.24 Rural 3 3 2 29 34 40 0.26 0.25 0.24 North-Eat 3 3 2 12 18 17 0.27 0.29 0.25 South-Eat 4 2 2 12 8 II 0.24 0.25 0.25 South 5 4 3 20 18 18 0.27 0.24 0.22 Region South-West 4 3 3 I O I O 11 0.29 0.27 0.25 West 6 5 3 13 12 13 0.26 0.24 0.25 North-West 2 3 2 8 9 8 0.24 0.20 0.23 Centre 5 4 3 16 I 5 I5 0.27 0.27 0.27 Bucharest 3 3 I 8 II 6 0.26 0.26 0.22 HHhead gender male 4 3 3 86 84 84 0.25 0.25 0.24 female 3 3 2 14 16 16 0.31 0.29 0.27 employee 3 2 1 25 25 20 0.21 0.21 0.18 employer 2 I I 1 0 0 0.21 0.12 0.16 self-employed I non-agriculture 2 2 1 2 3 0.26 0.17 0.21 self-employed HHhead agriculture 1 1 1 3 4 2 0.30 0.31 0.21 occupational status unemployed 28 28 24 5 1 51 53 0.32 0.31 0.30 pensioner 2 2 2 18 18 21 0.23 0.21 0.21 pupil, student 0 3 0 0 0 0 - 0.19 housewife 4 I 1 I 0 0 0.38 0.62 0.33 other 2 I 0 0 0 0 0.29 0.28 Less than 35 3 2 2 16 15 1 1 0.30 0.33 0.25 HHheadage 35-60 5 4 3 73 74 76 0.26 0.25 0.25 More than 60 2 2 1 I O 12 13 0.25 0.21 0.2I Family with children 4 3 3 39 39 40 0.25 0.25 0.23 Rural poor 2 2 2 4 7 5 0.41 0.46 0.39 Urban poor 5 4 4 6 5 5 0.43 0.48 0.48 Poor family with children 3 3 2 5 5 4 0.40 0.44 0.37 Poor elderly 2 2 1 2 2 1 0.45 0.40 0.3I Poor farmer 1 1 0 I 1 0 0.36 0.46 0.39 Poor pensioner 2 2 2 3 2 2 0.42 0.41 0.32 Poor large household (more than 5) 3 3 3 3 4 4 0.32 0.36 0.31 Total 4 3 2 100 100 100 0.26 0.25 0.24 Source: Romania Household Budget Surveys, authors' calculations 31 Table A5.11 any in kind social benefits - Adequacy Coverage (%) Targeting(YO) (distribution of funds) (share o f benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 I 22 24 23 9 8 6 0.06 0.05 0.05 quintiles of 2 21 23 25 II I O 8 0.05 0.05 0.05 consumption before 3 22 22 22 16 14 II 0.05 0.05 0.05 50% of transfer 4 21 22 24 22 23 18 0.05 0.06 0.06 5 22 22 25 41 46 57 0.06 0.07 0.10 Poorest decile before 50% of transfer 24 22 23 4 3 3 0.06 0.05 0.06 Area of residence Urban 21 21 23 67 73 78 0.06 0.07 0.09 Rural 23 24 25 33 27 22 0.04 0.05 0.05 North-East 25 24 27 15 14 13 0.05 0.05 0.06 South-Eat 22 21 24 15 II 11 0.06 0.06 0.06 South 24 25 28 17 14 25 0.05 0.05 0.10 Region South-West 19 19 19 8 8 6 0.05 0.06 0.06 West 20 19 19 I 5 5 0.04 0.04 0.05 North-West 20 22 22 II 1 1 10 0.04 0.05 0.06 Centre 21 22 23 1 1 11 7 0.05 0.06 0.05 Bucharest 18 26 24 17 26 24 0.08 0.10 0.12 HH headgender male 22 23 24 77 73 79 0.05 0.06 0.07 female 20 21 24 23 27 21 0.07 0.09 0.08 employee 20 20 20 22 23 20 0.03 0.04 0.04 employer 21 18 23 1 0 2 0.02 0.02 0.09 self-employed non-agriculture 25 28 26 3 3 2 0.03 0.04 0.03 self-employed HHhead agriculture 27 27 27 7 6 4 0.04 0.04 0.05 occupationalstatus unemployed 24 22 31 4 2 2 0.04 0.04 0.04 pensioner 21 24 26 63 64 69 0.08 0.10 0.12 pupil, student I O 18 13 0 1 0 0.03 0.18 0.06 housewife 26 17 26 1 0 0 0.05 0.03 0.05 other 14 32 28 0 0 I 0.05 0.06 0.14 Less than 35 31 30 31 12 I O 8 0.03 0.03 0.03 HH head age 35-60 19 20 21 41 39 47 0.04 0.05 0.07 More than 60 21 23 25 47 50 45 0.08 0.10 0.10 Family with children 36 37 37 36 30 26 0.03 0.03 0.03 Ruralpoor 23 23 23 5 3 2 0.05 0.05 0.05 Urbanpoor 22 24 20 3 2 1 0.07 0.05 0.07 Poor family with children 37 38 37 7 3 2 0.05 0.04 0.05 Poor elderly 15 15 17 2 I I 0.06 0.07 0.06 Poor farmer 26 28 28 2 1 I 0.05 0.05 0.05 Poor pensioner 16 18 19 3 2 1 0.06 0.06 0.06 Poor large household(more than 5) 31 33 33 5 3 2 0.05 0.04 0.05 Total 22 23 24 100 100 IO0 0.05 0.06 0.07 Source: Romania Household Budget Surveys,authors' calculations 32 Table A512 subsidized medicines - Adequacy Coverage(YO) Targeting(YO) (distribution of funds) (share of benefits in beneficiaries'consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 1 2 2 3 3 2 2 0.07 0.10 0 08 quintilesof 2 4 4 6 8 6 5 0.08 0.08 0.08 consumptionbefore 3 6 6 7 16 II 9 0.08 0.09 0.09 50% of transfer 4 6 8 I O 24 24 17 0.09 0.10 0.08 5 7 9 11 49 56 67 0.10 0.12 0.17 Poorest decile before 50% of transfer 2 1 2 1 0 1 0.08 0.08 0.10 0.09 0.13 Area of residence Urban 7 8 I O 76 81 83 0.11 Rural 3 3 4 24 19 17 0.09 0.10 0.10 North-Eat 4 4 7 13 13 II 0.09 0.11 0.10 South-Eat 5 4 7 13 I O 11 0.09 0.12 0.12 South 5 6 7 20 14 28 0.12 0.1I 0.22 2 4 4 4 0.09 0.10 0.07 Region South-West 5 6 West 5 5 6 6 4 5 0.06 0.06 0.09 North-West 6 5 7 I O 8 7 0.07 0.08 0.09 Centre 8 8 8 14 12 7 0.07 0 09 0.07 Bucharest 7 13 14 20 33 27 0.13 0.14 0.15 79 0.09 0.10 0.13 HHheadgender male 5 6 7 74 72 female 6 7 9 26 28 21 0.11 0.14 0.12 employee 3 4 5 18 20 16 0.06 0.08 0.08 employer 3 3 4 0 0 2 0.06 0.02 0.27 self-employed non-agriculture 2 1 1 1 0 0.06 0.08 0.07 self-employed HHhead agriculture 3 2 3 3 2 2 0.07 0.11 0.10 occupationalstatus unemployed 3 3 4 2 1 1 0.07 0.09 0.05 pensioner 9 1 1 14 76 75 78 0.11 0.12 0.15 pupil, student 0 3 2 0 0 0 - 0.27 0.01 housewife 3 1 2 0 0 0 0.05 0.04 0.09 other 2 3 8 0 0 1 0.21 0.10 0.22 Less than 35 2 2 3 5 3 4 0.07 0.07 0.07 HHheadage 35-60 4 5 6 40 37 48 0.08 0.09 0.14 More than 60 9 I O 14 55 ' 59 48 0.11 0.13 0.12 Family with children 4 4 5 18 18 16 0.06 0.08 0.09 Rural poor 2 I 2 1 0 1 0.08 0.06 0.10 Urban poor 4 3 4 1 1 0 0.07 0.09 0.07 Poor family with children 3 2 2 1 0 0 0.08 0.06 0.04 Poor elderly 3 3 4 1 0 1 0.06 0.07 0.08 Poor farmer 2 1 1 0 0 0 0.07 0.05 0.13 Poor pensioner 3 4 5 I I 1 0.08 0.08 0.08 Poor large household(more than 5) 3 2 3 1 0 0 0.07 0.06 0.07 Total 5 6 8 100 100 100 0.09 0.11 0.13 Source: Romania HouseholdBudget Surveys, authors' calculations 33 Table A513 bread and milk in the school - Adequacy Coverage (%) Targeting (%) (distribution of funds) (share of benefits in beneficiaries' consumption) 2004 2005 2006 2004 2005 2006 2004 2005 2006 1 18 19 19 24 24 26 0.04 0.03 0.03 quintilesof 2 15 17 16 21 23 22 0.02 0.02 0.02 consumptionbefore 3 14 13 13 20 20 18 0.02 0.02 0.02 50%' of transfer 4 12 11 12 17 16 19 0.01 0.01 0.02 5 12 II I O 18 17 15 0.01 0.01 0.01 Poorest decile before 50%of transfer 20 17 19 13 I O 12 0.04 0.04 0.04 Area of residence Urban II 10 I O 44 42 42 0.02 0.01 0.01 Rural 17 19 18 56 58 58 0.02 0.02 0.02 North-Eat 19 17 18 24 23 23 0.02 0.02 0.02 South-Eat II 13 15 II 12 13 0.02 0.02 0.02 South 16 17 16 18 18 17 0.02 0.02 0.02 Region South-West I 5 14 12 II 9 8 0.02 0.02 0.02 West 14 12 II I O 8 8 0.02 0.02 0.02 North-West 13 14 13 II 12 12 0.01 0.02 0.02 Centre 12 14 14 11 12 13 0.02 0.02 0.02 Bucharest 6 6 5 4 5 6 0.02 0.01 0.02 HHhead gender male 15 15 14 86 87 85 0.02 0.02 0.02 female 11 1 1 12 14 13 15 0.02 0.02 0.02 employee 15 14 13 44 43 43 0.02 0.01 0.02 employer 17 14 17 1 1 1 0.01 0.01 0.01 self-employed non-agriculture 21 24 22 8 I O 9 0.02 0.02 0.02 self-employed HHhead agriculture 23 24 23 18 19 19 0.02 0.02 0.02 occupationalstatus unemployed 19 18 25 9 6 8 0.03 0.02 0.02 pensioner 8 9 8 18 18 17 0.02 0.01 0.02 pupil, student 0 3 3 0 0 0 0.02 0.02 housewife 22 15 21 1 1 1 0.03 0.02 0.03 other II 22 19 0 I 2 0.02 0.02 0.07 HHheadage Lessthan35 27 27 27 38 38 36 0.02 0.02 0.02 35-60 12 13 13 48 50 5 1 0.02 0.02 0.02 More than 60 9 8 8 14 13 12 0.02 0.01 0.02 Family with children 30 32 32 100 100 99 0.02 0.02 0.02 Rural poor 19 19 19 16 13 13 0.04 0.04 0.04 Urbanpoor 17 17 15 7 4 4 0.04 0.03 0.03 Poor family with children 33 34 35 23 17 17 0.04 0.03 0.04 Poorelderly I O 8 9 3 2 3 0.03 0.03 0.03 Poor farmer 24 24 26 8 6 7 0.04 0.03 0.04 Poor pensioner I O I O 11 4 3 3 0.03 0.03 0.03 Poor large household(more than 5) 27 29 30 15 13 12 0.04 0.03 0.03 Total 14 14 14 100 100 100 0.02 0.02 0.02 Source: Romania Household Budget Surveys, authors' calculations 34 APPENDIX6. GEOGRAPHICAL DISTRIBUTION POVERTY AND MALV T4RGElED TRANSFERS OF /Poverty rate and GMIprogram participation I Spearman's Rho (20031) i?051 1-1 ~ 031 ~ L -0 25 - 001 - Source:, authors' calculations based on Romania Poverty Map (University of Bucharest, 2004) and administrative data on GMI (MLFEO) 35 Table A6.1 Guaranteed Minimum Income 2006 Distribution of Distributionof Distribution of Distribution of poor beneficiaries poverty gap funds North-Est 4 4 4 4 South-Est 5 3 5 3 South 4 5 5 5 Urban South-West 3 2 3 2 West 2 1 I 2 North-West 2 1 1 1 Centre 4 2 4 3 Bucharest 3 1 2 2 North-Est 21 22 21 21 SoUth-Emt I 1 8 12 8 South 11 15 11 13 Rural South-West 12 14 12 16 West 3 4 3 4 North-West 8 9 9 8 Centre 7 9 8 8 Bucharest 1 0 1 0 ISource: Total IO0 IO0 IO0 IO0 Romania Household Budget Survey, authors ' calculations 36 Table A6.2 Targeted (income-tested) Family Benefits2006 Distribution of Distribution of poor (members Distribution of poverty gap (for Distribution of of households beneficiaries householdswith funds with children) children) North-Eat 4 3 4 3 South-Eat 4 3 4 3 South 4 3 4 3 Urban South-West 4 3 3 3 West 1 1 1 1 North-West 1 1 1 2 Centre 5 3 5 3 Bucharest 3 0 2 0 North-Eat 23 27 24 26 South-Eat II I O 12 I O South II 15 I O 14 Rural South-West II 13 I O 13 West 3 1 3 1 North-West 9 9 9 9 Centre 7 7 8 7 Bucharest 0 0 0 0 Total 100 100 IO0 IO0 Source: Romania Household Budget Survey, authors' calculations 37