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Distributional outcomes of a decentralized welfare program

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  • Galasso, Emanuela
  • Ravallion, Martin

Abstract

It is common for central governments, to delegate authority over the targeting of welfare programs to local community organizations - which may be better informed about who is poor, though possibly less accountable for getting the money to the local poor - while the center retains control over how much goes to each local region. The authors outline a theoretical model of the interconnected behavior of the various actors in such a setting. The model's information structure provides scope for econometric identification. Applying data for a specific program in Bangladesh, they find that overall targeting was mildly pro-poor, mostly because of successful targeting within villages. But this varied across villages. Although some village characteristics promoted better targeting, these were generally not the same characteristics that attracted resources from the center. The authors observe that the center's desire for broad geographic coverage, appears to have severely constrained the scope for pro-poor village targeting. However, poor villages tended not to be better at reaching their poor. They find some evidence that local institutions matter. The presence of cooperatives for farmers and the landless, appears to be associated with more pro-poor program targeting. The presence of recreational clubs has the opposite effect. Sometimes the benefits of decentralized social programs are captured by local elites, depending on the type of spending being decentralized. When public spending us on private (excludable) good, and there is no self-targeting mechanism to ensure that only the poor participate, there is ample scope for local mis-targeting.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2316.

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Date of creation: 30 Apr 2000
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Handle: RePEc:wbk:wbrwps:2316

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Related research

Keywords: Services&Transfers to Poor; Poverty Impact Evaluation; Poverty Reduction Strategies; Environmental Economics&Policies; Poverty Monitoring&Analysis; Safety Nets and Transfers; Rural Poverty Reduction; Services&Transfers to Poor; Governance Indicators; Poverty Impact Evaluation;

References

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  1. Alderman, H., 1998. "Social Assistance in Albania. Decentralization and Targeted Transfers," Papers 134, World Bank - Living Standards Measurement.
  2. Ravallion, Martin, 1984. "The social appraisal of local public spending using revealed fiscal preferences," Journal of Urban Economics, Elsevier, vol. 16(1), pages 46-64, July.
  3. Behrman, Jere R. & King, Elizabeth M., 2001. "Household schooling behaviors and decentralization," Economics of Education Review, Elsevier, vol. 20(4), pages 321-341, August.
  4. Martin Browning & Pierre-Andre Chiappori, 1994. "Efficient Intra-Household Allocations: a General Characterization and Empirical Tests," Department of Economics Working Papers 1994-02, McMaster University.
  5. La Ferrara, Eliana, 2002. "Inequality and group participation: theory and evidence from rural Tanzania," Journal of Public Economics, Elsevier, vol. 85(2), pages 235-273, August.
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  7. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
  8. Lanjouw, Peter & Ravallion, Martin, 1998. "Benefit incidence and the timing of program capture," Policy Research Working Paper Series 1956, The World Bank.
  9. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
  10. Baland, J-M & Platteau, J-P, 1997. "Wealth Inequality and Efficiency in the Commons," Papers 193, Notre-Dame de la Paix, Sciences Economiques et Sociales.
  11. Pranab Bardhan, 1996. "Decentralised Development," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 31(2), pages 139-156, July.
  12. Wolfson, Michael C, 1994. "When Inequalities Diverge," American Economic Review, American Economic Association, vol. 84(2), pages 353-58, May.
  13. Ravallion, Martin, 2000. "Monitoring Targeting Performance When Decentralized Allocations to the Poor Are Unobserved," World Bank Economic Review, World Bank Group, vol. 14(2), pages 331-45, May.
  14. Plotnick, Robert D, 1986. "An Interest Group Model of Direct Income Redistribution," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 594-602, November.
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