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Transfers in Cash and In Kind: Theory Meets the Data

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Author Info
Janet Currie
Firouz Gahvari

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Abstract

We review theoretical explanations for in-kind transfers in light of the limited empirical evidence. After reviewing the traditional paternalistic arguments, we consider explanations based on imperfect information and self-targeting. We then discuss the large literature on in-kind programs as a way of improving the efficiency of the tax system and a range of other possible explanations including the "Samaritan's Dilemma", pecuniary effects, credit constraints, asymmetric information amongst agents, and political economy considerations. Our reading of the evidence suggests that paternalism and interdependent preferences are leading overall explanations for the existence of in-kind transfer programs, but that some of the other arguments may apply to specific cases. Political economy considerations must also be part of the story.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13557.

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Date of creation: Oct 2007
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Handle: RePEc:nbr:nberwo:13557

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Find related papers by JEL classification:
H4 - Public Economics - - Publicly Provided Goods
H5 - Public Economics - - National Government Expenditures and Related Policies

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Cited by:
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  1. Paul A. Raschky & Manijeh Schwindt, 2009. "On the Channel and Type of International Disaster Aid," Working Papers 2009-16, Faculty of Economics and Statistics, University of Innsbruck. [Downloadable!]
    Other versions:
  2. Paul Bingley & Ian Walker, 2008. "The Labor Supply Effect of In-Kind Transfers," Working Papers 200820, Geary Institute, University College Dublin. [Downloadable!]
  3. Audun Langørgen, 2008. "Targeting Public Services through Unequal Treatment of Unequals," Discussion Papers 558, Research Department of Statistics Norway. [Downloadable!]
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