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Cash Transfers and Poverty Reduction in Chile

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  • 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.)

Abstract

By all accounts, poverty in Chile has declined dramatically over the last 20 years, with the nacional headcount ratio declining from nearly 40% in 1987 to below 14% in 2006. Due to data limitations, most research on poverty in Chile has focused on national and regional estimates, yet recent improvements in poverty mapping methodologies now enable the analysis of poverty at the sub-regional level. In this paper, we employ these methodologies to assess the impact of cash transfers on poverty rates at the county level. We find that transfers significantly reduce the incidence of poverty and that estimated headcount ratios fall by between 5% and 68%. To better understand variation in the effectiveness of transfers in reducing poverty at the local level, we also explore the interplay between transfers and geography. We find that the greatest reductions in poverty at the county level occur in rural households and that topography influences the effectiveness of transfers in some areas. Taken together, these findings suggest that targeting at low levels of aggregation can help to deliver further reductions in poverty.

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Bibliographic Info

Paper provided by Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines in its series ILADES-Georgetown University Working Papers with number inv187.

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Length: 35 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:ila:ilades:inv187

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Keywords: inequality; poverty mapping; government subsidies; cash transfers; Chile;

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  1. Demombynes, Gabriel & Ozler, Berk, 2005. "Crime and local inequality in South Africa," Journal of Development Economics, Elsevier, vol. 76(2), pages 265-292, April.
  2. Besley, Timothy & Kanbur, Ravi, 1990. "The principles of targeting," Policy Research Working Paper Series 385, The World Bank.
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Cited by:
  1. 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, The World Bank, number 2597, October.
  2. Claudio A Agostini & Bárbara Flores & Claudia Martinez, 2011. "Equidad Tributaria Horizontal en el Impuesto al Ingreso en Chile," Working Papers wp_012, Adolfo Ibáñez University, School of Government.

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