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Targeting Social Transfers to the Poor in Mexico

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Author Info
David Coady
Susan Parker

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Abstract

Mexico’s main social support program, Oportunidades, combines two methods to target cash to poor households: an initial self-selection by households who acquire knowledge about the program and apply for benefits, followed by an administrative determination of eligibility based on a means test. Self-selection improves targeting by excluding high-income households, while administrative targeting does so mainly by excluding middle-income households. The two methods are complementary: expanding program knowledge across households substantially increases applications from non-poor households, thus reinforcing the importance of administrative targeting. The paper shows that targeting can be further improved through redesigning the means test and differentiating transfers according to demographic characteristics.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/60.

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Length: 30 pages
Date of creation: 19 Mar 2009
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Handle: RePEc:imf:imfwpa:09/60

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Related research
Keywords: Transfer of real resources ; Mexico ; Social policy ; Social safety nets ; Data analysis ;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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  1. Pudney, Stephen & Monica Hernandez & Ruth Hancock, 2003. "The Welfare Cost of Means-Testing: Pensioner Participation in Income Support," Royal Economic Society Annual Conference 2003 171, Royal Economic Society. [Downloadable!]
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  2. James J. Heckman & Jeffrey Smith, 2003. "The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program," University of Western Ontario, CIBC Human Capital and Productivity Project Working Papers 20034, University of Western Ontario, CIBC Human Capital and Productivity Project. [Downloadable!]
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  3. Duclos, Jean-Yves, 1995. "Modelling the take-up of state support," Journal of Public Economics, Elsevier, vol. 58(3), pages 391-415, November. [Downloadable!] (restricted)
  4. Angus Deaton & Christina Paxson, 1998. "Economies of Scale, Household Size, and the Demand for Food," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 897-930, October. [Downloadable!] (restricted)
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  5. Lanjouw, Peter & Ravallion, Martin, 1995. "Poverty and Household Size," Economic Journal, Royal Economic Society, vol. 105(433), pages 1415-34, November. [Downloadable!] (restricted)
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  6. David Coady, 2004. "Targeting Outcomes Redux," World Bank Research Observer, Oxford University Press, vol. 19(1), pages 61-85.
  7. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
  8. Blundell, Richard & Fry, Vanessa & Walker, Ian, 1987. "Modelling the Take-up of Means-tested Benefits: the Case of Housing Benefits in the United Kingdom," Economic Journal, Royal Economic Society, vol. 98(390), pages 58-74, Supplemen. [Downloadable!] (restricted)
  9. David Coady, 2006. "The Welfare Returns to Finer Targeting: The Case of The Progresa Program in Mexico," International Tax and Public Finance, Springer, vol. 13(2), pages 217-239, May. [Downloadable!] (restricted)
  10. César Martinelli & Susan W. Parker, 2006. "Deception and Misreporting in a Social Program," Levine's Bibliography 321307000000000120, UCLA Department of Economics. [Downloadable!]
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  11. Micklewright, John & Coudouel, Aline & Marnie, Sheila, 2004. "Targeting and Self-Targeting in a New Social Assistance Scheme," IZA Discussion Papers 1112, Institute for the Study of Labor (IZA). [Downloadable!]
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