NCPA - National Center for Policy Analysis

How Chile Handles Welfare

June 28, 1997

Welfare is neither an entitlement nor a way of life in Chile, according to observers. The Chilean system offers training and tiny income subsidies -- but people are expected to work and look after themselves.

  • A reasonable but limited number of housing subsidies are issued each year to those who have accumulated private savings, with the subsidy taking the form of a grant toward the purchase of a house.
  • Since the subsidy rests on private ownership, low-income housing in Chile is not in the run-down condition of public housing in the U.S.
  • In lieu of handing out unemployment benefits, there are training programs, tax incentives to private companies, child care services for job-seeking mothers, and a small subsidy to cover lunch.
  • Observers warn, however, that some politicians want to establish unemployment insurance in order to have government benefits to hand out in return for votes.

Some analysts say that Chile's unprecedented prosperity and employment make such programs unnecessary -- and that their introduction would harm the long-term prospects of the country and its citizens.

Source: Paul Craig Roberts, "Welfare Doesn't Have to be Habit-Forming -- Just Look at Chile," Business Week, July 28, 1997.


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