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Needs-based Targeting without Knowing Household Incomes: How Would it Work in Russia?

Author

Listed:
  • Raymond Struyk

    (Urban Institute-TPN, VI Jokai u.34, H-1065 Budapest, Hungary, tpn@mail.matav.hu)

  • Anastasia Kolodeznikova

    (Institute for Urban Economics (Moscow), akolodez@chat.ru)

Abstract

Proxy means tests are often suggested for use in countries where tighter targeting of benefits of social programmes are desired but verification of household incomes is difficult. This paper reports on simulations of the use of two types of proxy means test in determining eligibility for Russia's housing allowance programme and the payments which eligible households would receive. Based on 1995 and 1996 survey data, tests are reported for three cities: Vladimir, Moscow and Gorodetz. The results consistently show that the proxy procedures introduce substantial errors into who is admitted to the programme. Most disturbing is the large share of eligible households who would be denied benefits using the first proxy (predicted income used for eligibility determination)—10-30 per cent. The average benefit loss for the poorest quintile of households falsely denied benefits is equivalent to about 20 per cent of their incomes. Under the alternative procedure based on demographic characteristics, errors are smaller than under the first procedure for pensioners and large families but much greater for lone mothers. But even for the first two groups, undercoverage runs at about 15 per cent. On balance, these results suggest that very great caution should be used in proposing proxy income tests of the type analysed here in the countries of the former Soviet bloc for means-tested programmes in general.

Suggested Citation

  • Raymond Struyk & Anastasia Kolodeznikova, 1999. "Needs-based Targeting without Knowing Household Incomes: How Would it Work in Russia?," Urban Studies, Urban Studies Journal Limited, vol. 36(11), pages 1875-1889, October.
  • Handle: RePEc:sae:urbstu:v:36:y:1999:i:11:p:1875-1889
    DOI: 10.1080/0042098992656
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    References listed on IDEAS

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    1. Grosh, M.E. & Baker, J.L., 1995. "Proxy Means Tests for Targetting Social Programs. Simulations and Speculation," Papers 118, World Bank - Living Standards Measurement.
    2. Grootaert, Christiaan & Braithwaite, Jeanine, 1998. "Poverty correlates and indicator-based targeting in Eastern Europe and the Former Soviet Union," Policy Research Working Paper Series 1942, The World Bank.
    3. van de Walle, Dominique, 1995. "Public spending and the poor : what we know, what we need to know," Policy Research Working Paper Series 1476, The World Bank.
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