Social Redistribution and Social Safety Net: The case of Indonesia during the Asian Financial Crisis.

In early 1998 the government of Indonesia established several Social Safety Net (SSN) programs, in order to help protect the poor and the newly poor resulting from the economic crisis. This study assesses the impact of these government’s initiatives and the findings indicate that the participation of the community in the SSN programs generally had positive impact on household consumption. However, only participation in the subsidized rice program significantly reduced the probability of a non-poor household falling into poverty. Similarly, the impact of participation in the SSN programs on the probability for poor households to move out of poverty is also largely insignificant. This implies that the benefits accrued to poor households from the SSN program are too small to have a significant impact on their likelihood of escaping poverty. Hence, despite the short term success of the SSN programs in alleviating some of the worst effects of the crisis, the program were not an effective tool for social redistribution.