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On the Targeting and Redistributive Efficiencies of Alternative Transfer Instruments

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  • David Coady
  • Emmanuel Skoufias

Abstract

The distributional characteristic provides an attractive alternative to conventional approaches used to evaluate the targeting performance of transfer programs. We decompose it into two components that are useful both conceptually and empirically; one capturing the targeting efficiency of the instrument, the other its redistributive efficiency. The redistributive index can also be generalized for the purposes of evaluating the degree of progressivity in tax‐benefit structures. For illustrative purposes, we present an empirical application of the distributional characteristic and its decomposition using Mexican data. The welfare gains from using categorical targeting and means testing reflect improvements in redistributive and targeting efficiency respectively.

Suggested Citation

  • David Coady & Emmanuel Skoufias, 2004. "On the Targeting and Redistributive Efficiencies of Alternative Transfer Instruments," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 11-27, March.
    • Handle: RePEc:bla:revinw:v:50:y:2004:i:1:p:11-27
    DOI: 10.1111/j.0034-6586.2004.00109.x
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    1. Hoddinott, John & Haddad, Lawrence James & Besley, Tim & Adato, Michelle, 2001. "Participation and poverty reduction," FCND briefs 98, International Food Policy Research Institute (IFPRI).
    2. Menon, Purnima & Ruel, Marie T. & Morris, Saul Sutkover, 2000. "Socio-economic differentials in child stunting are consistently larger in urban than rural areas," FCND discussion papers 97, International Food Policy Research Institute (IFPRI).
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