Testing Vietnam's public safety net

An effective public safety net can be important in a poor transition economy such as Vietnam. Yet we know very little about the performance of existing public transfers as a safety net. Using panel data, the paper investigates whether Vietnam's main social welfare transfers promoted poor people out of poverty and whether they protected the non-poor from becoming poor. It also explores the role transfer programs played in the country's dramatic reduction of poverty in the 1990s. Counterfactual consumption levels without transfers allow for behavioral responses. The findings suggest that transfer programs helped few people escape poverty and protected even fewer from falling into poverty. The public safety net appears to have been largely irrelevant to the country's recent poverty reduction record.