How well has the Social Protection Scheme Reduced Vulnerability in Chile?

This paper empirically investigates the impact of Chile’s social protection’s monetary subsidies on vulnerability to poverty during 1996-2006. Using the National Socioeconomic Characterization panel survey data, we adopt the Chaudhuri et al. (2002) method to estimate vulnerability. Since access to monetary subsidies is not random, we use the propensity score matching method to address the problem of selection bias in testing the effect of these transfers. The effect of the social protection transfers on vulnerability is examined both for the entire sample and the poor using Average Treatment Effect on the Treated (ATT) approach and sensitivity analyses. Our 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, we find that these subsidies are unable to address the structural causes of vulnerability faced by individuals in Chile.