The Poor and the Social Sectors during a Period of Macroeconomic Adjustment: Empirical Evidence for Jamaica

Abstract

Considerable uncertainty remains about the human impact of macroeconomic adjustment. Analysis of the impact of adjustment on the poor and on the social sectors is difficult because it involves evaluating a counterfactual situation in which households are affected by prices, incomes, and public services with the possibility of substantial substitutions—all within an economywide framework with complicated concurrent and lagged interactions. In this article, we utilize time-series data for Jamaica to examine whether macroeconomic adjustment, initiated in the early 1980s but intensified in 1984–85, was associated with significant deterioration in various indicators of health, nutritional, and welfare outcomes, particularly among the poor. Although we find evidence of substantial cuts in governmental expenditures on social services, there is little confirmation of significant short-run deterioration in human capital indicators during the adjustment period.