Social Transfers, Labor Supply and Poverty Reduction: The Case of Albania

55 Pages Posted: 20 Apr 2016 Last revised: 2 Jun 2020

See all articles by Andrew Dabalen

Andrew Dabalen

World Bank - Africa

Talip Kilic

World Bank - Development Data Group (DECDG)

Waly Wane

World Bank

Date Written: November 1, 2008


In 1993, in response to persistent unemployment, and rising poverty and social unrest, the government of Albania introduced an anti-poverty program, namely Ndihma Ekonomike; in 1995 it was extended to all poor households. This paper estimates the separate effects of participation in this income support program and the old-age pension program on objective and subjective measures of household poverty. The analysis uses the nationally representative Albanian Living Standards Measurement Surveys carried out in 2002 and 2005. Using propensity score matching methods, the paper finds that Ndihma Ekonomike households, particularly urban residents, have lower per capita consumption and are more likely to be discontented with their lives, financial situation, and consumption levels than their matched comparators. In contrast, households receiving pensions are not significantly different from their matched comparators in reference to the same set of outcomes. The paper finds that the negative impact of Ndihma Ekonomike participation on welfare is driven by a negative labor supply response among work-eligible individuals. This negative labor response is larger among women and urban residents. In contrast to Ndihma Ekonomike, the receipt of old-age pension income transfers does not significantly impact the labor supply of prime-age individuals living in pension households

Keywords: Inequality, Labor Markets, Access of Poor to Social Services, Economic Assistance, Services & Transfers to Poor, Disability, Social Protections & Assistance, Employment and Unemployment

Suggested Citation

Dabalen, Andrew and Kilic, Talip and Wane, Waly, Social Transfers, Labor Supply and Poverty Reduction: The Case of Albania (November 1, 2008). World Bank Policy Research Working Paper No. 4783, Available at SSRN:

Andrew Dabalen (Contact Author)

World Bank - Africa ( email )

1818 H Street
Washington, DC 20433
United States

Talip Kilic

World Bank - Development Data Group (DECDG) ( email )

Via Labicana 110
Rome, Lazio 00184

Waly Wane

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States


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