The main concepts underlying the analysis of the poverty and social impacts of reforms are:
- Impact of what: What is being analyzed?
PSIA focuses on the analysis of the distributional impact of policy changes. This includes macroeconomic, structural and sectoral reforms and policies.
- Impact on what: What dimensions of welfare and poverty are assessed?
PSIA assesses the distributional impact of policy reforms on the well-being or welfare of different stakeholders. Poverty is a multidimensional phenomenon, and well-being and welfare are understood here to include both monetary and non-monetary dimensions.
- Impact on whom: Whose welfare is being analyzed?
PSIA is concerned with impacts on various groups, with a particular focus on the poor and vulnerable. Depending on country circumstances and on the reform or policy under analysis, groups may be defined in terms of income, gender, ethnicity, age, geographic location, livelihoods, etc.
- Impact how: How are impacts channeled?
Policies or reforms can have an impact on households and individuals through five main transmission channels: employment; prices (production, consumption and wages); access to goods and services; assets (physical, natural, human, financial and social); and transfers and taxes.
- Impact how: How do institutions affect outcomes?
The impacts of policy reforms are mediated through institutions - the formal and informal rules of the game in society. The public, private and civil society institutions whose rules mediate impacts include markets, legal systems, and the formal rules and informal behavior of implementing agencies.
- Impact when: When do impacts materialize?
Policies and reforms can impact households and individuals both in the short-term and in the longer run. Different groups will typically be affected differently over time.
- Impact if: What are the risks of unexpected outcomes?
PSIA identifies risks associated with assumptions that are key to the success of the reform: assumptions on the way agents and institutions act, on the channels through which policy impacts are transmitted, and on the exogenous conditions that need to be in place for the reform to achieve its intended impacts.
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