Poverty Reduction Using Self-Interested Intermediaries: Implications for the Design of Inter-Governmental Transfers
AbstractThe paper studies the design of inter-governmental transfers when redistribution is effected through the public provision of a private good (education) by local government agents. The central government does not necessarily have the same preferences as the local agents regarding the relative welfare of poor and non-poor individuals, but must rely on them to implement public spending decisions. This divergence of preferences induces an incentive role, which does not rely on the existence of externalities, for matching grants that take the form of two-part tariffs. Numerical simulations are used to investigate the dependence of the matching grant on the relationship between central and local preferences, local poverty rates, and the use of poverty maps.
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Bibliographic InfoPaper provided by Georgetown University, Department of Economics in its series Working Papers with number gueconwpa~03-03-18.
Date of creation: 03 Sep 2003
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Postal: Georgetown University Department of Economics Washington, DC 20057-1036
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Postal: Marcia Suss Administrative Officer Georgetown University Department of Economics Washington, DC 20057-1036
Find related papers by JEL classification:
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
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