_Table 4: Albania, baseline shock: poverty and inequality impacts_

|**Targeting →**|||**Means**||**Baseline Sho**<br>**Household**<br>**Eligibility ↓**|**ck**<br><br>|||**PMT Ex-**|**PMT Post**|
|---|---|---|---|---|---|---|---|---|---|---|
|**Budget ↓**|**Original**<br>**Beneficiaries**|**Means**<br>**Testing (Ex-**<br>**Ante Poor)**|**Testing**<br>**(Post**<br>**Shock**<br>**Poor)**|**Universal **|**PMT Ex-ante**|**PMT Post**<br>**Shock**|**Pefect**<br>**Loss**<br>**Indicator**|**Imperfect**<br>**Loss**<br>**Indicator**|**ante or**<br>**Perfect**<br>**Loss**<br>**Indicator**|**Shock or**<br>**Perfect**<br>**Loss**<br>**Indicator**|
||**(1a)**|**(2)**|**(3)**|**(4)**|**(5)**|**(6)**|**(7)**|**(8)**|**(9)**|**(10)**|
|**Poverty Rate**<br>||||**Pre-sho**|**ck: 0.320; Post-**|**shock: 0.37**|**3**||||
|(1) 0.05% GDP|-0.005|-0.006|-0.008|-0.005|-0.005|-0.005|-0.006|-0.006|-0.006|-0.006|
|(2) 1.0% GDP|-0.027|-0.049|-0.067|-0.024|-0.031|-0.028|-0.029|-0.025|-0.028|-0.027|
|**Poverty Gap Sqr.**||||**Pre-sho**|**ck: 6.721; Post-**|**shock: 7.71**|**5**||||
|(1)0.05% GDP|-0.373|-0.486|-0.468|-0.341|-0.410|-0.402|-0.328|-0.329|-0.352|-0.352|
|(2) 1.0% GDP|-1.522|-3.346|-3.127|-1.282|-2.249|-2.154|-1.010|-0.982|-1.447|-1.450|
|**Gini**<br>||||**Pre-sho**|**ck: 0.371; Post-**|**shock: 0.37**|**5**||||
|(1) 0.05% GDP|-0.002|-0.003|-0.003|-0.002|-0.003|-0.003|-0.002|-0.002|-0.002|-0.002|
|(2)1.0% GDP|-0.013|-0.031|-0.030|-0.009|-0.020|-0.020|-0.008|-0.007|-0.011|-0.012|
|**Coverage**|||||||||||
|(1)Average Transfer|$ 105.1|$70.3|$60.6|$18.7|$70.3|$60.7|$37.7|$49.7|$28.1|$27.2|
|(2)Average Transfer|$ 1,946.5|$1,301.7|$1,123.4|$345.5|$1,302.4|$1,123.6|$698.7|$925.8|$521.2|$503.3|
|Beneficiaries|137,071|204,973|237,496|772,197|204,856|237,471|381,857|289,901|511,939|530,157|
|Ex-ante poor|0.28|1.00|1.00|1.00|0.60|0.65|0.40|0.31|0.78|0.81|
|Ex-ante non-poor|0.13|0.00|0.08|1.00|0.17|0.22|0.62|0.46|0.70|0.72|
|Ex-ante Vulnerable|0.17|0.00|0.12|1.00|0.25|0.32|0.60|0.46|0.73|0.76|
|Post-shockpoor|0.27|0.86|1.00|1.00|0.55|0.59|0.48|0.36|0.81|0.83|

Note: impacts are color-coded from dark red (highest impacts) to dark blue (lowest impact). Not all households declare labor income.

The next best (simulated) response (and the first best response for a policy maker who cannot perfectly identify the poor) is to use a Proxy Means test and distribute the additional budget to the poorest households (columns 5 and 6). Again, in the case of Albania, and under the baseline shock, it looks like the better response would be to distribute the additional resources to only the pre-shock poor as identified through the PMT, because the shock did not affect much extreme poverty. Note, also, that while using the PMT is an effective, practical response, exclusion errors become substantial – less than 60 percent of the post-shock poor would be covered by the transfer.

The third-best response would be to distribute additional benefits to existing social assistance beneficiaries (column 1a), which is the actual government response. Because the social programs do not cover all the poor, this remains however an inferior response than a more generous coverage which, even if the transfer per household remains lower, would cover all the pre-shock poor.

Next, the fourth- and fifth- best responses would be to cover all the poor classified as such through a PMT, plus people who suffered a loss as identified through an indicator (columns 9 and 10). Again, this remains a worse response than just covering the pre-shock poor because the specific shock we considered did not affect much extreme poverty.

Note also that while a universal transfer would be the only way to guarantee that all the poor would be covered, providing a universal, flat transfer to all households would deliver extremely low poverty impacts (column 4), because to ensure that all the poor are covered the transfer would have to be given to all non-poor households as well, which lowers substantially the amount given to each poor household. There is therefore an important tradeoff between equity considerations (i.e., covering all the poor), and poverty impacts.

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