SHIELDING THE POOR
role of informal safety nets. Although the topics covered are by no means exhaustive, the chapters provide lessons from experience and a good overview of the issues that policymakers will have to face in designing appropriate ways of shielding the poor from adverse shocks.9 While a few of the chapters are very technical in nature, others are primarily descriptive and accessible to a wide audience. The more technical chapters show the elements that have to be considered when attempting to strike a balance between social protection and efficiency. Because of its focus on the uninsured poor, this book has great relevance for developing countries and a very limited one, if any, for the industrial world. As development proceeds in the less developed world, one would expect to see a transition away from self-insurance and social assistance to market-based risk management strategies and publicly provided social risk management instruments such as sick pay, health care, disability and old-age insurance, and unemployment insurance. One key question is what set of policies can accelerate the process of formalizing the informal labor market. A common view is that many of the labor market regulations designed to protect the labor force from abuse are major impediments to the latter because their costs and design make it rational to evade and avoid those regulations. Although of utmost importance, this discussion has been dealt with elsewhere and will not be a topic of this book.10 Two other areas are not addressed: weak institutions and weak public finances. Although the latter are usually cited as a reason for not implementing more aggressive publicly funded consumption smoothing mechanisms, evidence shows that this factor has been exaggerated. A ROAD MAP The chapters in this book address various topics: the impact of economic crises on poverty and inequality and the importance of a safety net to shield poor people from their impact; mechanisms to address unemployment; health shocks and old age among the poor; the role of social funds as safety nets; microfinance to smooth consumption; and lessons from the developed world.
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For a broader discussion of risks and social protection, see Inter-American Development Bank (2000) and World Bank (2000a, chaps. 8,9). 10 See, for example, Edwards and Lustig (1997).
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