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Equity and Policy Effectiveness with Imperfect Targeting

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Author Info
Sami Bibi
Jean-Yves Duclos

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Abstract

We propose a general cost-of-inequality approach that jointly integrates horizontal and vertical equity criteria in the assessment of poverty alleviation programs, with the strength of each criterion being captured through its own inequity-aversion parameter. This contrasts with the assessment of poverty alleviation programs done with simple under-coverage and leakage ratios or with other methods that do not take into account the heterogeneity of the poor and that do not address directly the social benefits of achieving normative criteria. Our methodology is illustrated using Tunisian data and two alternative poverty alleviation policies. We find inter alia that the social ranking of commodity and socio-demographic targeting in Tunisia depends on the policymaker's comparative preference for vertical and horizontal equity.

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Paper provided by CIRPEE in its series Cahiers de recherche with number 0335.

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Date of creation: 2003
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Handle: RePEc:lvl:lacicr:0335

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Related research
Keywords: Poverty; Vertical Equity; Horizontal Inequity; Transfers; Targeting; Tunisia;

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Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Mervyn A. King, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," NBER Working Papers 0468, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Park, Albert & Wang, Sangui & Wu, Guobao, 2002. "Regional poverty targeting in China," Journal of Public Economics, Elsevier, vol. 86(1), pages 123-153, October. [Downloadable!] (restricted)
  3. Duclos, Jean-Yves & Jalbert, Vincent & Araar, Abdelkrim, 2003. "Classical Horizontal Inequity and Reranking: an Integrating Approach," Cahiers de recherche 0306, CIRPEE. [Downloadable!]
  4. Foster, James E & Shorrocks, Anthony F, 1988. "Poverty Orderings," Econometrica, Econometric Society, vol. 56(1), pages 173-77, January. [Downloadable!] (restricted)
  5. Jean-Yves Duclos & Peter Lambert, . "A Normative Approach to Measuring Classical Horizontal Inequity," Discussion Papers 97/3, Department of Economics, University of York. [Downloadable!]
    Other versions:
  6. Joseph E. Stiglitz, 1982. "Utilitarianism and Horizontal Equity: The Case for Random Taxation," NBER Working Papers 0694, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Louis Kaplow, 1996. "A Fundamental Objection to Tax Equity Norms: A Call for Utilitarianism," NBER Working Papers 4961, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Louis Kaplow, 1989. "Horizontal Equity: Measures in Search of a Principle," NBER Working Papers 1679, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Adams, Richard H., 2000. "Self-targeted subsidies - the distributional impact of the Egyptian food subsidy system," Policy Research Working Paper Series 2322, The World Bank. [Downloadable!]
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  11. Plotnick, Robert, 1982. "The concept and measurement of horizontal inequity," Journal of Public Economics, Elsevier, vol. 17(3), pages 373-391, April. [Downloadable!] (restricted)
  12. Zheng, Buhong, 1997. " Aggregate Poverty Measures," Journal of Economic Surveys, Blackwell Publishing, vol. 11(2), pages 123-62, June. [Downloadable!] (restricted)
  13. Jalan, Jyotsna & Ravallion, Martin, 1998. "Are there dynamic gains from a poor-area development program?," Journal of Public Economics, Elsevier, vol. 67(1), pages 65-85, January. [Downloadable!] (restricted)
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  14. Bibi, Sami, 2002. "On the Impact of Better Targeted Transfers on Poverty in Tunisia," Cahiers de recherche 0203, CIRPEE. [Downloadable!]
  15. Charles Blackorby & David Donaldson, 1984. "Ethical Social Index Numbers and the Measurement of Effective Tax-Benefit Progressivity," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 683-94, November. [Downloadable!] (restricted)
  16. 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)
  17. Peter Lambert & Xavier Ramos, 1997. "Horizontal Inequity and Vertical Redistribution," International Tax and Public Finance, Springer, vol. 4(1), pages 25-37, January. [Downloadable!] (restricted)
  18. Riskin, Carl, 1994. "Chinese Rural Poverty: Marginalized or Dispersed?," American Economic Review, American Economic Association, vol. 84(2), pages 281-84, May. [Downloadable!] (restricted)
  19. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July. [Downloadable!] (restricted)
  20. Jean-Yves Duclos & Paul Makdissi, 2004. "Restricted and Unrestricted Dominance for Welfare, Inequality, and Poverty Orderings," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 145-164, 02. [Downloadable!] (restricted)
    Other versions:
  21. Creedy, John, 1996. "Comparing Tax and Transfer Systems: Poverty, Inequality and Target Efficiency," Economica, London School of Economics and Political Science, vol. 63(250), pages S163-74, Suppl.. [Downloadable!] (restricted)
  22. Plotnick, Robert, 1981. "A Measure of Horizontal Inequity," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 283-88, May. [Downloadable!] (restricted)
  23. Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104. [Downloadable!] (restricted)
  24. King, Mervyn A, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," Econometrica, Econometric Society, vol. 51(1), pages 99-115, January. [Downloadable!] (restricted)
  25. Schady, Norbert R, 2002. "Picking the Poor: Indicators for Geographic Targeting in Peru," Review of Income and Wealth, Blackwell Publishing, vol. 48(3), pages 417-33, September. [Downloadable!] (restricted)
    Other versions:
  26. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
  27. Stephen Jenkins & Peter Lambert, . "Horizontal Inequity Measurement: A Basic Reassessment," Discussion Papers 96/21, Department of Economics, University of York.
  28. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March. [Downloadable!] (restricted)
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  30. Balcer, Yves & Sadka, Efraim, 1986. "Equivalence scales, horizontal equity and optimal taxation under utilitarianism," Journal of Public Economics, Elsevier, vol. 29(1), pages 79-97, February. [Downloadable!] (restricted)
  31. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May. [Downloadable!] (restricted)
  32. Russell Davidson, 2006. "Stochastic Dominance," Departmental Working Papers 2006-19, McGill University, Department of Economics. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sami Bibi & Jean-Yves Duclos, 2007. "Poverty-decreasing indirect tax reforms: Evidence from Tunisia," International Tax and Public Finance, Springer, vol. 14(2), pages 165-190, April. [Downloadable!] (restricted)
    Other versions:
  2. Christophe MULLER and Sami BIBI, 2008. "Focused Transfer Targeting against Poverty Evidence from Tunisia," THEMA Working Papers 2008-37, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise. [Downloadable!]
  3. Christophe Muller & Sami Bibi, 2007. "Focused Targeting against Poverty Evidence from Tunisia," Working Papers DT/2007/07, DIAL (Développement, Institutions & Analyses de Long terme). [Downloadable!]
  4. Jean-Yves Duclos, 2009. "What is “Pro-Poor”?," Social Choice and Welfare, Springer, vol. 32(1), pages 37-58, January. [Downloadable!] (restricted)
    Other versions:
  5. Jean-Yves Duclos, 2006. "Equity and Equality," Cahiers de recherche 0629, CIRPEE. [Downloadable!]
    Other versions:
  6. Sami Bibi, 2006. "Growth with Equity is Better for the Poor," Cahiers de recherche 0640, CIRPEE. [Downloadable!]
  7. Christophe Muller, 2008. "Anti-Poverty Transfers without Riots in Tunisia," Working Papers. Serie AD 2008-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
    Other versions:
  8. Ravallion, Martin, 2004. "Competing concepts of inequality in the globalization debate," Policy Research Working Paper Series 3243, The World Bank. [Downloadable!]
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