Following the transition to a market economy, the incidence and depth of poverty have been a source of concern in Romania. Social assistance programs have a critical role in mitigating the short run adverse impacts of transition on vulnerable groups. This paper analyses the distributive impact of public social assistance (transfer) programs, based on the data from the Integrated Household Survey for March 1994, and the available secondary information. The main questions addressed are: how have social assistance transfers fared in the recent period; how effective have the transfers been in reaching the poor; do the programs differ in their distributive impacts; what is the net impact of transfers on the poverty gap ratio, and how significant are the redistributive gins from a better targeting of programs.

The paper concludes that though transfers are contributing to a reduction of the incidence and depth of poverty, many deserving poor (such as female-headed households) may not be receiving the needed transfers. Simulations suggest that significant gains can be realized by better targeting. The paper also notes that rural-urban disparities in transfer receipts are currently substantial. The paper also examines the pros and cons of the proposed minimum income guarantee, and argues that the scheme may be difficult to implement. Moreover, care needs to be taken to ensure that the proposed scheme does not trigger adverse incentives for work.