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Efficient delivery of subsidies to the poor: Improving the design of a cash transfer program in Ecuador

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  • Carrillo, Paul E.
  • Ponce Jarrín, Juan

Abstract

Many governments provide monetary transfers to low-income families. The mechanism through which these subsidies are distributed may contain several inefficiencies that diminish the net-value obtained by the recipients. In this paper, we build and estimate a behavioral dynamic model that allows us to evaluate the efficiency of current and alternative distribution mechanisms. The proposed model is simple and resembles the individual's decision to collect the transfer. To estimate it, we use data from a cash transfer program in Ecuador where recipients incur high transaction costs each time they collect their benefits. Despite its simplicity, our model is able to replicate the observed data remarkably well. We use it to simulate alternative payment mechanisms and show that an adequate design of the delivery of payments can substantially increase the value of cash transfer programs.

Suggested Citation

  • Carrillo, Paul E. & Ponce Jarrín, Juan, 2009. "Efficient delivery of subsidies to the poor: Improving the design of a cash transfer program in Ecuador," Journal of Development Economics, Elsevier, vol. 90(2), pages 276-284, November.
    • Handle: RePEc:eee:deveco:v:90:y:2009:i:2:p:276-284
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    References listed on IDEAS

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    9. Schady, Norbert & Araujo, Maria Caridad, 2006. "Cash transfers, conditions, school enrollment, and child work : evidence from a randomized experiment in Ecuador," Policy Research Working Paper Series 3930, The World Bank.
    10. Rawlings, Laura B. & Rubio, Gloria M., 2003. "Evaluating the impact of conditional cash transfer programs : lessons from Latin America," Policy Research Working Paper Series 3119, The World Bank.
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    Cited by:

    1. Samuel Bazzi & Sudarno Sumarto & Asep Suryahadi, "undated". "Intinya Penentuan Waktu: Respons Belanja dan Suplai Kerja Rumah Tangga terhadap Bantuan Langsung Tunai," Working Papers 3610, Publications Department.
    2. Aparicio Fenoll, Ainoa & Quaranta, Roberto, 2022. "How to Best Fight Poverty: The Uneven Ex-post Effects of Conditional and Unconditional Cash Transfers on Labor Earnings," IZA Discussion Papers 15658, Institute of Labor Economics (IZA).
    3. Paredes, Tatiana, 2017. "The long-term effects of cash transfers on education and labor market outcomes," MPRA Paper 88809, University Library of Munich, Germany, revised 03 Sep 2018.
    4. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications - Books, The World Bank Group, number 2597.
    5. Casco José L., 2022. "Intra-household Resource Shares under Poverty Transfers: Evidence from Ecuador," Working Papers 2022-03, Banco de México.
    6. Samuel Bazzi & Sudarno Sumarto & Asep Suryahadi, "undated". "It’s All in the Timing: Household Expenditure and Labor Supply Responses to Unconditional Cash Transfers," Working Papers 280, Publications Department.
    7. Daniel Coq-Huelva & Angie Higuchi & Rafaela Alfalla-Luque & Ricardo Burgos-Morán & Ruth Arias-Gutiérrez, 2017. "Co-Evolution and Bio-Social Construction: The Kichwa Agroforestry Systems ( Chakras ) in the Ecuadorian Amazonia," Sustainability, MDPI, vol. 9(10), pages 1-19, October.
    8. Rinehart, Chloe S. & McGuire, James W., 2017. "Obstacles to Takeup: Ecuador's Conditional Cash Transfer Program, The Bono de Desarrollo Humano," World Development, Elsevier, vol. 97(C), pages 165-177.
    9. Paredes-Torres, Tatiana, 2017. "The impact of exposure to cash transfers on education and labor market outcomes," MPRA Paper 79008, University Library of Munich, Germany.

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