Social Protection in a Crisis: Argentina's Plan Jefes y Jefas

Abstract

The article assesses the impact of Argentina's main social policy response to the severe economic crisis of 2002.The program was intended to provide direct income support for families with dependents and whose head had become unemployed because of the crisis.Counterfactual comparisons are based on a matched subset of applicants not yet receiving program assistance.Panel data spanning the crisis are also used.The program reduced aggregate unemployment, though it attracted as many people into the workforce from inactivity as it did people who otherwise would have been unemployed.Although there was substantial leakage to formally ineligible families and incomplete coverage of those who were eligible, the program did partially compensate many losers from the crisis and reduced extreme poverty.Income transfer programs are a common social policy response to macroeconomic crises.Stated goals vary, but the common (explicit or implicit) goal is to help protect the living standards of families most adversely affected by the crisis.One of the largest recent programs is Argentina's Plan Jefes y Jefas, introduced in January 2002 as a public safety net response to the severe economic crisis that hit Argentina at the end of 2001.Unemployment and poverty rates reached record levels (World Bank 2003).Jefes aimed to provide direct income support for families with dependents who had lost their main source of earnings due to the crisis.To ensure that the program reached those in greatest need, work requirements were imposed.With support from a World Bank loan (and equivalent counterpart funds from the government), the program expanded rapidly to cover about 2 million households by late 2002.