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Public Finance, Governance, and Cash Transfers in Alleviating Poverty and Inequality in Chile

Author

Listed:
  • Claudio Agostini

    (ILADES-Georgetown University, Universidad Alberto Hurtado)

  • Phillip Brown

    (Colby College, Waterville, Maine, United States and International Food Policy Research Institute, Washington, D.C., United States.)

  • Diana Paola Góngora

    (ILADES-Georgetown University, Universidad Alberto Hurtado)

Abstract

As the Chilean government seeks to reduce both poverty and inequality through cash transfers to poor households, local governments are responsible for both identifying the poor and allocating transfers. Until recently, however, evaluating the effectiveness of local governments in enacting these policies has been restricted by data limitations. The paper builds on recent evidence that cash transfers had highly variable impacts on poverty and inequality at the county level in 2002. In particular, we explore how local public finance and the strength of the governing mandate influence the efficiency of cash transfers. With a richly-specified model, we find that public spending on goods and services, the fraction of available subsidies claimed by the local government, and the share of county land that is zoned for industrial purposes are all correlated with considerable reductions in poverty and inequality. In addition, the strength of the governing mandate weakly influences the efficiency of transfers in reducing poverty, but not inequality. These results demonstrate that a better understanding of such institutions can lead to more efficient targeting for social programs.

Suggested Citation

  • Claudio Agostini & Phillip Brown & Diana Paola Góngora, 2009. "Public Finance, Governance, and Cash Transfers in Alleviating Poverty and Inequality in Chile," ILADES-UAH Working Papers inv225, Universidad Alberto Hurtado/School of Economics and Business.
    • Handle: RePEc:ila:ilades:inv225
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    References listed on IDEAS

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    1. Jan-Willem Rijt, 2008. "An Alternative Model of the Formation of Political Coalitions," Theory and Decision, Springer, vol. 64(1), pages 81-101, February.
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    Cited by:

    1. Bronfman, Javier & Floro, Maria, 2014. "How well has the Social Protection Scheme Reduced Vulnerability in Chile?," MPRA Paper 63255, University Library of Munich, Germany.
    2. Lawrence Sáez, 2013. "Methods in governance research: a review of research approaches," Global Development Institute Working Paper Series esid-017-13, GDI, The University of Manchester.
    3. Maria S. Floro & Javier Bronfman, 2012. "How Well have Social Protection Schemes in Chile Reduced Household Vulnerability?," Working Papers 2012-03, American University, Department of Economics.

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    More about this item

    Keywords

    Monetary transfers; Inequality; Poverty;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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