2012-03 How well have social protection schemes in Chile reduced household vulnerability?

This paper empirically investigates the impact of Chile's social protection programs called Red de Protección Social on household vulnerability during 1996-2006. It makes use of the CASEN (Encuesta de Caracterización Socioeconómica Nacional) panel household survey data involving 10,287 individuals respondents, aged 15 years and older who were surveyed in the 1996, 2001 and 2006. It adopts the Chaudhuri et al (2002). method for estimating vulnerability and uses the difference-in-difference approach. Since access to the monetary transfers is not random, we use propensity score matching technique to address the problem of selection bias in testing the effect of the monetary transfers provided to targeted recipients under the social protection program. The effect of the programs are also examined on two household groups namely, the transitory poor and the chronic poor. Our results suggest that the impact of the monetary transfers on vulnerability is mixed. It seems to help lower the vulnerability of the transitory poor, but has little impact on the chronic poor. The results are also sensitive to the type of estimation method and difference-in-difference technique used.