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Should Cash Transfers Be Confined to the Poor? Implications for Poverty and Inequality in Latin America

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  • Acosta, Pablo A.

    (World Bank)

  • Leite, Phillippe

    (World Bank)

  • Rigolini, Jamele

    (World Bank)

Abstract

This paper compares for 13 Latin American countries the poverty and inequality impacts of cash transfer programs that are given to all children and the elderly (that is, "categorical" transfers), to programs of equal budget that are confined to the poor within each population group (that is, "poverty targeted" transfers). The analysis finds that both the incidence of poverty and the depth of the poverty gap are important factors affecting the relative effectiveness of categorical versus poverty targeted transfers. The comparison of transfers to children and the elderly also supports the view that choosing carefully categories of beneficiaries is almost as important as targeting the poor for achieving a high poverty and inequality impact. Overall, the findings suggest that although in the Latin American context poverty targeting tends to deliver higher poverty impacts, there are circumstances under which categorical targeting confined to geographical regions (sometimes called "geographic targeting") may be a valid option to consider. This is particularly the case in low-income countries with widespread pockets of poverty.

Suggested Citation

  • Acosta, Pablo A. & Leite, Phillippe & Rigolini, Jamele, 2011. "Should Cash Transfers Be Confined to the Poor? Implications for Poverty and Inequality in Latin America," IZA Policy Papers 34, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izapps:pp34
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    References listed on IDEAS

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    1. Emmanuel Skoufias & Vincenzo Di Maro, 2008. "Conditional Cash Transfers, Adult Work Incentives, and Poverty," Journal of Development Studies, Taylor & Francis Journals, vol. 44(7), pages 935-960.
    2. Daniel Cotlear, 2011. "Population Aging : Is Latin America Ready? [Envejecimiento de la población : ¿está preparada América Latina ?]," World Bank Publications - Books, The World Bank Group, number 2542.
    3. 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.
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    Cited by:

    1. World Bank, 2015. "Central America Social Expenditures and Institutional Review," World Bank Publications - Reports 22672, The World Bank Group.
    2. Emily Nell & Martin Evans & Janet Gornick, 2016. "Child Poverty in Middle-Income Countries," LIS Working papers 666, LIS Cross-National Data Center in Luxembourg.
    3. Adama Bah & Samuel Bazzi & Sudarno Sumarto & Julia Tobias, 2019. "Finding the Poor vs. Measuring Their Poverty: Exploring the Drivers of Targeting Effectiveness in Indonesia," The World Bank Economic Review, World Bank, vol. 33(3), pages 573-597.
    4. -, 2022. "Estimates of the cost of essential health service packages and the graduation and school canteen programmes proposed in the National Policy on Social Protection and Promotion (PNPPS) of Haiti," Documentos de Proyectos 48295, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. World Bank, 2014. "Honduras Social Expenditures and Institutional Review," World Bank Publications - Reports 21804, The World Bank Group.
    6. Hertog, Steffen, 2020. "Reforming wealth distribution in Kuwait: estimating costs and impacts," LSE Research Online Documents on Economics 105564, London School of Economics and Political Science, LSE Library.
    7. Tromben, Varinia & Cecchini, Simone & Gilbert, Randolph, 2020. "Estimates of the cost of cash transfers under the National Policy on Social Protection and Promotion (PNPPS) in Haiti," Documentos de Proyectos 46248, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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    More about this item

    Keywords

    cash transfers; targeting; social assistance; poverty;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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