Does villager social capital hinder poverty targeting? Evidence from poverty-stricken county of Western China

Poor targeting performance is a common concern in the increasingly implemented decentralized targeted antipoverty programs in developing countries. Different from previous literature that focuses on targeting errors caused by elite capture, we explore the role of villager social capital as a whole in poverty targeting in the context of China's Targeted Poverty Alleviation (TPA) policy. The empirical analysis uses a unique census-type data from three administrative and seventeen natural villages in the poverty-stricken county in Western China in 2017. Villager social capital is measured by a proxy index by combing reciprocity, support time, gift expenses, and political connection of villagers. We verify that the villager with rich villager social capital is more likely to be a beneficiary of TPA by using instrumental variable estimation. The nonpoor can mobilize their higher level of social capital than the poor to capture the beneficiary quotas that should be allocated to the poor, resulting in mistargeting. Such effect persists after controlling political elite capture effects. The findings point out villager social capital is the root cause of poor targeting in decentralized targeting programs in rural China and also lend new support from China to the classic debate on social capital is not the capital of the poor.