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This dissertation explores issues of development of social safety nets (SSN) in countries in transition, Ukraine in particular, and looks at whether reducing social security expenditures to stimulate economic growth policy is an effective way to combat poverty in such countries. The dissertation develops a sequence of increasingly sophisticated forecasting models to explore the fiscal and economic implications of recent increases in social welfare spending in Ukraine: a simple macroeconomic model; a macroeconomic model with GDP feedback; and a microsimulation model. The analysis based on the models suggests that the simple macroeconomic model may significantly underestimate costs of SSN. Policy analysis based on the microsimulation model suggests that a policy of increasing social benefits in the current social safety net system would be the least optimal policy within the scope of evaluated policies to reduce number of people in poverty while sustaining economic growth. The dissertation concludes that available SSN financial resources would be more effective in reducing poverty if current SSN programs were replaced by a minimal subsistence level income guarantee program.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Social safety net as a policy problem

  • Chapter Three

    Specifics of the social safety nets in transition

  • Chapter Four

    Analyzing the social safety net in Ukraine

  • Chapter Five

    Naive static model

  • Chapter Six

    Economic feedback of the increase in social security benefits

  • Chapter Seven

    Better targeting of social benefits

  • Chapter Eight

    Microsimulation model of the social safety net

  • Chapter Nine

    Evaluating social safety net policy reform options for Ukraine

  • Chapter Ten

    Conclusion

Research conducted by

This document was submitted as a dissertation in April 2007 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Jacob Klerman (Chair), Susan Gates, and Marek Dabrowski.

This report is part of the RAND Corporation dissertation series. Pardee RAND dissertations are produced by graduate fellows of the Pardee RAND Graduate School, the world's leading producer of Ph.D.'s in policy analysis. The dissertations are supervised, reviewed, and approved by a Pardee RAND faculty committee overseeing each dissertation.

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