THE WAYS TO REDUCE THE POVERTY RATE AND INCREASE THE PROPORTION OF THE MIDDLE CLASS IN THE RA

Аннотация

Purpose: drawing upon the international experience in fighting poverty and by estimating the statistically significant impact of income (and its separate components) of the poor households of the RA on consumption (and its separate components) to identify the existing social protection and labor policy priorities in this area and highlight the solutions. Design/methodological approach: series of bivariate regression equations were estimated with a view to estimate the statistically significant impact of each of the income sources (sales of agricultural products, family benefit, pension, remittances, salary and etc.) on the overall consumption expenditures and the components thereof (food items, non-food items, durables). Findings/Results: the level of consumption of the Armenian poor households, in general, is significantly impact by salaries, self-employment income, pensions, family benefits, and sales of agricultural products as well as by changes in remittances. Family benefit is going to be the decisive factor influencing the overall level of consumption in that the family benefit`s 10% increase could cause an increase in overall consumption by 10.22%, on average. Meanwhile the expected 10% change in total income could cause a 4.69 % change in total consumption, in general. Conclusions: Money received from foreign labor markets, the labor market of the RA and though the social security system of the RA had statistically significant impact on the consumption level (and its components) of poor households of the RA. The poverty reduction policies in Armenia have to be implemented in the framework of more effective migration policy, active labor market policies and social protection policies. The enhancement of social protection system will considerably expedite the process of reducing the poverty rate in the country (basically by means of increasing the amount of family benefits). Practical Implications: The findings can be used by the Ministry of Labor and Social Affairs, various donor organizations, and by those scholars who are interested in this topic.