Safety Nets and Safety Ropes: Comparing the Dynamic Benefit Incidence of Two Indonesia "JPS" Programs

In programs that respond to economic shock or intend to mitigate household risk, it is not just the current level of expenditures that matters but also the changes in expenditures. While pure "safety net" programs may intend only to benefit those who are currently poor, programs to mitigate shocks may intend to provide transfers to those who have fallen, whether or not they have fallen below an absolute poverty threshold.

This paper examines the performance of two programs created to respond to the social impact of the crisis in Indonesia. The targeting of each program was different, both in design and in practice. The authors find strong evidence that:

• One of the programs, a subsidized sale of rice was targeted to the "permanently" poor;
• The targeting was only weakly related to the "shock" in consumption expenditures;
• The employment creation programs were far more responsive to changes in expenditures.