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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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Policy Papers with number 34.

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Length: 33 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:iza:izapps:pp34

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Keywords: cash transfers; targeting; social assistance; poverty;

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  1. Skoufias, Emmanuel & di Maro, Vincenzo, 2006. "Conditional cash transfers, adult work incentives, and poverty," Policy Research Working Paper Series 3973, The World Bank.
  2. 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.
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