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Type Working Paper - PEP-MPIA Working Paper
Title Simulation of the effects of the economic crisis and response policies on children in West and Central Africa: The case of Burkina Faso
Author(s)
Issue 2010-14
Publication (Day/Month/Year) 2010
URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1808886
Abstract
Burkina Faso’s hard earned economic gains in recent years have been eroded by the 2008-09 world financial and economic crisis. The country will particularly feel the effects of the world economic crisis due to its close links with the world economy. Most of the adverse effects are transmitted to households then passed onto children. The situation of children principally depends on the monetary and non-monetary well-being of their household. This, together with their greater vulnerability, means that children are at risk of suffering more, and for longer, from the impacts of the crisis. It is therefore crucial to understand and anticipate the effects that the crisis may have on children in Burkina Faso and to propose options for social protection to counter these effects.

To this end, we propose a macro-micro economic approach. Macro-micro economic analysis uses a general calculable equilibrium (CGE) model to simulate the impacts of various transmission channels of the crisis to the Burkinabe economy. The results of these simulations are then used for the micro-econometric analysis, which integrates individual and household economic behaviour to evaluate the impact of the crisis on child welfare.

According to our simulations, which run from 2009 to 2011, the financial crisis respectively leads to 5 and 1 percentage point increases in the incidence of monetary and caloric poverty among Burkinabe children. Moreover, the school enrollment rate for children will decline by about 0.7 percentage points due to the crisis, while the child labour rate will increase by about 1 percentage point. Finally, a 1 percentage point decrease in the medical consultation rate among children is expected, along with substitution from modern health services to traditional medicine. Large regional and rural vs. urban gaps are also noted.

A monetary transfer policy targeting poor children appears to be the most effective at reversing the negative effects of the crisis and returning to the trend that would have existed without the crisis. Such a policy, financed by external aid and with a budget of 1% of GDP, re-establishes the trend that monetary poverty would have followed in the absence of a crisis and even leads to a reduction in hunger. It also limits the crisis’ adverse effects on school enrollment, child labour and sick children’s access to modern health care services. A universal (non-targeted) variant of this transfer policy for 0-5 year-olds has similar results and is easier to enact. Policies which subsidize food and cereals, as well as monetary transfer policies for the Centre and Mouhoun regions (the areas most affected by the August-September 2009 floods) were also analyzed.

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