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Efficient Delivery of Cash Transfers to the Poor: Improving the Design of a Conditional Cash Transfer Program in Equador

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Author Info

  • Paul Carrillo

    ()
    (Department of Economics/Institute for International Economic Policy, George Washington University)

  • Juan Ponce Jarrin

    ()
    (Department of Economics, Facultad Latinoamericana de Ciencias Sociales Flacso)

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.

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Bibliographic Info

Paper provided by The George Washington University, Institute for International Economic Policy in its series Working Papers with number 2008-08.

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Length: 35 pages
Date of creation: Apr 2007
Date of revision:
Publication status: Published in Journal of Development Economics, Volume 90, Issue 2, November 2009, pp. 276-284
Handle: RePEc:gwi:wpaper:2008-08

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Web page: http://www.gwu.edu/~iiep/
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Keywords: Cash Transfer Programs; Behavioral Model; Distribution of Payments;

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