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 programs promoted poor people out of poverty and/or protected the non-poor from becoming poor. It explores the role transfers 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 transfers helped few people escape poverty and protected even fewer from poverty. The public safety net appears to have been largely irrelevant to the country's recent poverty reduction record, though a larger well-designed public safety net could well play a more important role in the future