Non-technical summarySocial security programmes are very important to tackle poverty and there is a variety of means-tested benefits in Bulgaria which step in to protect the poor or those at risk of poverty.However, there is very little evidence on the effectiveness of these benefits and given that in the past years poverty has been increasing in Bulgaria, such research is strongly required. This paper shows estimates of various indicators on the targeting efficiency, the extent to which the actual redistribution of a benefit provision corresponds to the desired redistribution, and the effect on poverty prevalence of two social assistance and two meanstested child benefits in Bulgaria. The results suggest that the benefits have very high non-take up rates: more than 60% of the intended beneficiaries for the social assistance and benefit for young children, and 39% of the intended beneficiaries for the child allowance have not reported a receipt in the data. On the other hand, a large proportion of the beneficiaries have incomes exceeding the income test which should disqualify them from entitlement. These results raise serious concerns about the quality of the implementation of the programmes.Despite being means-tested benefits and being very progressive, the social assistance benefits cover only a quarter of the poor population. On the other hand, the child benefits are almost evenly distributed across the deciles of the income distribution due to their generous income test. However, they fail in providing income support to all poor households with children, leaving around 30% of them unreached by the transfers. As a consequence of the low level of the benefits and low coverage of the poor, the benefits do not contribute to a large reduction in the poverty levels: the poverty incidence is reduced by less than 4% while poverty gap and severity decrease by 13% and 21%, respectively. Furthermore, I use the tax and benefit microsimulation model EUROMOD to simulate the effect of the benefits under the assumption of perfect implementation and full take-up. The results show that, even under this scenario, the benefits do not reduce poverty levels significantly. Finally, I consider five reform scenarios which show that there is a scope for policy improvement which could contribute to a better targeting of the benefits to those in need, more adequate income support and a significant reduction in poverty.
Evaluating the Performance of Means-Tested Benefits in Bulgaria 1Iva Valentinova Tasseva* September 2012
AbstractLittle is known about the effectiveness of means-tested benefits in Bulgaria. Using individual and household level data, I analyse the performance of two social assistance and two meanstested child benefits. I find that the programmes reach a very small proportion of the households with incomes below a relative poverty line. Furthermore, the transfers are characterized with very high non-take up and inclusion of non-entitled or non-poor recipients.Poverty rates decrease by a small degree among benefit clients...