Essays on Vulnerability, Poverty and Social Policies: The Case of Chile

This study offers a deeper look into poverty, risk and deprivation in Chile. Currently in Chile, the Government gauges poverty solely using a national income poverty line, thus missing different aspects of well-being, such as deprivations in health, education and living standards. Additionally, there is no estimation of the level of exposure to future poverty, a key element to take into account when designing and implementing poverty alleviation and human development programs. Chapter I analyzes poverty dynamics and vulnerability to poverty, using the 1996-2001-2006 National Socioeconomic Characterization Survey (CASEN) panel data. The chapter provides estimates of individual levels of vulnerability to poverty using the Chaudhuri et al. (2002) methodology. For all the years covered in the survey vulnerability to poverty affects a larger number of individuals and households than what is observed in the national poverty counts. Using the same data set and the vulnerability estimations of chapter I, chapter II empirically investigates the impact of Chile's social protection's monetary subsidies on vulnerability to poverty during 1996-2006. Since access to monetary subsidies is not random, the use the propensity score matching method to address the problem of selection bias in testing the effect of these transfers is used. The effect of the social protection transfers on vulnerability is examined both for the entire sample and the poor using the Average Treatment Effect on the Treated (ATT) approach and sensitivity analyses. The results suggest that the impact of the monetary subsidies is limited and mixed. They tend to help lower the vulnerability of those who have access to these subsidies in all three periods covered by the survey, but the subsidies show limited effect on the transitory poor. In general, the findings support the claim that these subsidies are unable to address the structural causes of vulnerability faced by individuals in Chile. Using the latest nationally-representative household survey for Chile (CASEN 2011), chapter III estimates multidimensional poverty both at the national and regional level. Based on the Alkire-Foster method and focusing on four dimensions of well-being -education, health, income and living standard- this chapter estimates the level and depth of multidimensional poverty for Chile in 2011. At national level, the results show that fewer individuals are subject to multidimensional poverty compared to the number of poor people estimated using the national income poverty line, however, large variance is found at the regional level, some regions present higher levels of multidimensional poverty than income poverty. Additionally, multidimensional poverty at the regional level appears to vary, both in terms of prevalence and its nature. The multidimensional nature of this methodology provides a deeper understanding of poverty and deprivation, thus it complements income poverty estimates by informing policymakers about the joint distribution of several deprivations. This information can be used to better design and target poverty alleviation programs, as well as better allocate resources at the regional and local level. The other two chapters are focused on evaluating social policy (monetary transfers under the social protection scheme and an evaluation of the national health system in Chile). Finally, chapter IV presents a critical evaluation of the national health system in Chile. This paper examines health insurance choice and its dynamics using panel data from Chile's National Socio Economic Characterization Survey 1996-2001-2006. Two different logistic models are used to explain the determinants of insurance choice as well as what drives the decision to move from the private to the public sector and vice versa. Income is a highly important determinant of choice, as well as age, education, geographical location and health status. Evidence of adverse selection against the public sector was found in both decision models. The results of this paper are in line with most of the previous investigations done on Chile's health insurance system but it advance previous knowledge on the topic by including the dynamism and power for causal inference that panel data permits. All papers are connected to each other in the sense that they study well-being and base the empirical analysis on the same survey data. The policy implications of the study unequivocally call for reform, both in terms of the way the Chilean government measures and conceptualizes poverty and in the way programs are design and implemented.