Understanding Poverty in Poland Book

This report is the product of the Poverty Assessment and Social Safety Net Reform mission that visited Poland in December of 1993. Poland was the first country in Eastern Europe to reestablish democracy and a market economy. The opening of the economy to the forces of international competition and the collapse of the Council for Mutual Economic Assistance (CMEA) initially led to a massive contraction of output and a sharp rise in unemployment. In the second half of 1992, however, the economy started to rebound, spurred by the rapid expansion of a private sector that now accounts for more than half of GDP. Yet this wrenching systemic transformation has led to ever-widening income disparities and poses the central problem of how the fruits of economic growth can be enjoyed by all - including the poor. The present report addresses the key policy questions of who the people with the lowest incomes are and how their situation has evolved in the transition, how important growth is for reducing poverty, how the labor market enables the poor to lift themselves out of poverty, and to what extent social transfers are targeted to the poor and how they can - given a tight budget constraint - be restructured to reduce poverty.