**The poverty effect shows a mixed picture across countries** . In countries like Chile, Mexico, Russia and Colombia the fiscal system results in a reduction in income poverty.  This does not mean that no poor person becomes poorer but that the number of people who move out of poverty is higher than those who become poor. In other countries, including Albania and Croatia, the number of people leaving poverty is smaller than those who become poor due to the burden of taxes. In other words, poverty increases from the combined effect of taxes, contributions and direct transfers. At the $4/day line, Albania stands out as one of the countries with the highest increase in poverty (Figures 7 and 8). Using different poverty lines, analysis from other countries in Europe, such as Croatia, Montenegro and Poland, also show sharp increases in poverty (at 70 percent, 62 percent and 51 percent, respectively, compared to Albania at 29 percent).

**Figure 7. Poverty reduction effect across countries ($2.5/day)** (a positive sign shows poverty reduction)

**Figure 8. Poverty reduction effect across countries ($4/day)** (a positive sign shows poverty reduction)

|<br> <br>Iran (2011-12)<br>Iran (2011-12)||
|---|---|
|South Africa (2010-11)<br>Ecuador (2011-12)||
|Ecuador (2011-12)<br>Uruguay (2009)||
|Uruguay (2009)<br>Jordan (2010-11)||
|Mexico (2010)<br>Chile (2013)||
|Colombia (2010)<br>Paraguay (2014)||
|Jordan (2010-11)<br>Mexico (2010)||
|Argentina (2012-13)<br>Colombia (2010)||
|Indonesia (2012)<br>Russia (2010)||
|Chile (2013)<br> <br> <br>Indonesia (2012)||
|Venezuela (2012)<br> <br>South Africa (2010-11)||
|Tunisia (2010)<br> <br>Peru (2009)||
|Paraguay (2014)<br> <br>Argentina (2012-13)||
|Costa Rica (2010)<br> <br>Costa Rica (2010)||
|<br> <br>Tunisia (2010)||
|Russia (2010)<br>||
|Brazil (2008-09)<br> <br>Venezuela (2012)||
|Peru (2009)<br> <br>Dominican Republic (2006-07)||
|El Sld 2011<br> <br>Uganda (2012-13)||
|avaor ()<br>Sri Lanka (2009-10)||
|<br>Dominican Republic (2006-07)<br>Bolivia (2009)<br>||
|Honduras (2011)<br>El Salvador (2011)||
|Sri Lanka (2009-10)<br>Honduras (2011)<br>||
|Albania (2015)<br>Brazil (2008-09)<br>||
|Bolivia (2009)<br>Nicaragua (2009)<br>||
|Uganda (2012-13)<br>Guatemala (2011)<br>||
|Nicaragua (2009)<br>Tanzania (2011-12)||
|Guatemala (2011)<br>Ghana (2012-13)<br>||
|Ghana (2012-13)<br>Albania (2015)||
|Tanzania (2011-12)||
|<br>-0.1|-0.05<br>0<br>0.05<br>0.1<br>0.15|
|-0.1<br>-0.05<br>0<br>0.05<br>0.1||

Source: Own estimates using the Albania HBS 2015. See references Source: Own estimates using the Albania HBS 2015. See references section for other countries. section for other countries.

# **Box 1. An Alternate Scenario: Pensions as Government Transfers**

<mark>Depending on the pension system prevalent in a country, pensions can be treated as deferred income or government transfers. The former is the case for contributory pension systems, in which people save throughout their lifetime and obtain benefits (savings) in old age. The latter is for pension systems that provide benefits as transfers from the overall government budget. Many pension systems are not in either</mark> extreme, rather they appear to be a combination of a deferred income portion and a subsidized portion.

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