The study analyzes Chile's strongeconomic growth, and well directed social programs, acombination that reduced the poverty rate in half, during aperiod of just eleven years. The previously noted trends infalling poverty, in terms of incidence, depth, and severity,continued into 1998, and the analysis shows there wasunambiguously less poverty between 1994, and 1998, observedat all levels of income. Clearly, income poverty is relatedto, and impacted by a number of important factors, such aslevel of education, larger families, or families headed bywomen, and employment opportunities. Evidence shows Chileachieved considerable improvements in key social indicators,i.e., infant mortality, life expectancy, and educationalcoverage, for the combination of the three social sectordeficit measures of poverty - education, health, and housing- with the income poverty measure, reveals that fifty onepercent of all households have neither social sector, norincome deficits. Nonetheless, income inequality remainedhigh by international standards, and appeared to haveworsened between 1994-98. Thus, adjusting income inequalityfor social spending became an important estimate,particularly if social programs were growing. Themethodology estimated imputed income transfers fromsubsidies in the three sectors, and the analysis confirmedthat adjustments for in-kind income transfers, substantiallyreduce the Gini coefficient on income inequality. Resultsindicate that Chile's success in reducing incomedisparities through social spending is linked to its systemfor targeting social programs.
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