This section shows the results obtained from Beckerman’s model. First, some introductory figures are shown; then Beckerman’s diagrams are given, and finally the measures of effectiveness and efficiency calculated are presented.
In total, we find 14,456 beneficiary households with 32,491 individuals who are not poor in the absence of MIS, which represents 26% of all MIS beneficiaries. The stimulus to employment calculated is €1,176,938, corresponding to 16,240 households with employed individuals (approximately 27%).
Beckerman’s diagrams should be used with caution. The legislation presents eight different poverty lines, one for each type of household, so a different figure is required for each type. They are all presented in Figure 2.4. As explained, only households that receive MIS are shown. They are sorted from the poorest (left) to the richest (right). The green line represents pre-benefit disposable income and the orange line post- benefit disposable income. To make the diagrams clearer, stimuli to employment are deducted from the post-disposable income line for those households with wage incomes, as indicated. Notice that the ordering of the households can change from one line to another, i.e. the poorest households before the MIS transfer might be not the same ones which are the poorest afterwards.
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At first sight, it can be seen that MIS almost eradicates poverty (under BC criteria and for MIS recipients) as the orange line is only below the poverty line in a very few cases. In other words, the post-poverty gap (Area D) is very small in most cases. Hence, most poor households that meet the requisites for MIS are lifted out of poverty. This is reflected in the effectiveness measure. Notice that the post-benefit poor households represented by the segment of the orange line below the poverty line are those described in the previous section. The second noteworthy fact shown by these figures is that the area between the poverty line and the orange lines (B and C) is often large, even after stimuli to employment are discounted. Specifically, all the households whose pre-MIS disposable income (green line) is above the poverty line are households which were not pre-poor. This brings to light the scale of the waste of resources, which must be reflected in the efficiency indexes.
The final step is to quantify the efficiency and effectiveness. Table 2.6 presents these measurements by type of household and Table 2.7 displays them for MIS beneficiaries all together.
Table 2.6 shows that effectiveness (OPRE) is high for all household types: the lowest is that of type 7 (2 adults, at least 1 retired) where 94% of poverty is eradicated among MIS recipients. However, efficiency is not so high, as already anticipated by the figures. Household 8 is the stand- out case: only 22% of the households that receive MIS were poor before the transfer and only 12% of the money invested in this type of household actually helps to reduce poverty. In terms of the number of each type of household, those which on which most resources are wasted are type 1 followed by type 3, as shown in the last column, mainly because only around 2/3 of the payments go directly to reducing poverty.
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Figure 2.4. Beckerman’s diagram by type of household.
Stimuli to employment are deducted in post-MIS line
1 adult
3 or more people (at least two adults)
Single-parent (2 or more children)
2 retired people
2 adults
Single-parent (1 child)
1 retired people
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Table 2.6. Beckerman measures of effectiveness and efficiency by type of household.
To assess MIS as a whole, the table 2.7 shows efficiency and effectiveness for all MIS recipients together.
Table 2.7. Measures of efficiency of the Beckerman’s diagram
Table 2.7 reveals that the Basque Country is very close to eradicating poverty for its definition of the term. The effectiveness in the eradication of poverty under the BC criteria for those households that meet the requisites for MIS is 98.3% (OPRE). The table also shows that 86.55% of total transfers were received by pre-poor people (VEE). Therefore, 13.45% of total transfers were given to non pre-poor people. Moreover, 37% (100-63) of the amount of MIS is not actually used to eliminate poverty and, in terms of efficiency, represents a “waste of resources”. These figures are in part expected in view of the figures given above. Finally, the last column of Table 2.7 shows the amount of money necessary to eradicate poverty with 100% efficiency and effectiveness: the MIS budget used exceeds the amount required to put an ends to poverty by approximately €12 million each month.
This raises the question of the reasons for these ineffectiveness findings. The first obvious candidate is that our dataset comes from reported income figures by the individuals interviewed, whereas MIS is
OPRE VEE PRE
Eradicate- poverty 1 1-adult 98.52% 94.79% 65.99% >4302861-€ 2 2-adults 99.35% 73.52% 53.25% >1686180-€ 3 3-or-more-people,-at-least-2-adults 98.63% 84.37% 63.55% >3602027-€ 4 Single>parent-(1-child) 97.37% 99.54% 76.67% >454740-€ 5 Single>parent-(2-or-more-children) 98.11% 93.99% 65.79% >403338-€ 6 1-retired-people 95.41% 82.14% 67.63% >449274-€ 7 2-adult,-at-least-1-retired 94.33% 48.03% 41.52% >552622-€ 8 3-or-more-people,-at-least-1-retired 95.65% 22.37% 11.82% >413384-€ Household-type
Overall poverty reduction effectiveness 98.27%
Vertical expenditure efficiency 86.55%
Poverty reduction efficiency 63.11%
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assigned using official registered income. It may be that that these two sources of information on income do not coincide, as explained in the data section. There may also be some lack of supervision of MIS recipients. If information on MIS households is not updated very frequently, some households may continue to receive transfers even after changes in their labor market situation should exclude them from MIS transfers.
In conclusion, in terms of effectiveness, poverty as defined in the Basque Country is close to being eradicated for MIS recipients. However, there is room for improvement in terms of efficiency. In fact, more money is spent than should be needed to eradicate poverty under the BC definition. In other words, with the same cost the BC poverty line could be brought closer to the standard extreme poverty line used in the literature, especially for those that are furthest away from the line. In light of the results of the analyses conducted here, the next section provides some policy recommendations on MIS provision.