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Local inequality and project choice : theory and evidence from Ecuador

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  • Araujo, M. Caridad
  • Ferreira, Francisco H.G.
  • Lanjouw, Peter
  • Ozler, Berk

Abstract

This paper provides evidence consistent with elite capture of Social Fund investment projects in Ecuador. Exploiting a unique combination of data-sets on village-level income distributions, Social Fund project administration, and province level electoral results, the authors test a simple model of project choice when local political power is unequally distributed. In accordance with the predictions of the model, poorer villages are more likely to receive projects that provide excludable (private) goods to the poor, such as latrines. Controlling for poverty, more unequal communities are less likely to receive such projects. Consistent with the hypothesis of elite capture, these results are sensitive to the specific measure of inequality used in the empirical analysis, and are strongest for expenditure shares at the top of the distribution.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3997.

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Date of creation: 01 Aug 2006
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Handle: RePEc:wbk:wbrwps:3997

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Keywords: Rural Poverty Reduction; Economic Theory&Research; Population Policies; Services&Transfers to Poor; Poverty Monitoring&Analysis;

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References

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  1. Bardhan, Pranab & Mookherjee, Dilip, 2005. "Decentralizing antipoverty program delivery in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 675-704, April.
  2. 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.
  3. Elbers, Chris & Lanjouw, Jean O. & Lanjouw, Peter, 2004. "Imputed welfare estimates in regression analysis," Policy Research Working Paper Series 3294, The World Bank.
  4. Demombynes, Gabriel & Elbers, Chris & Lanjouw, Jenny & Lanjouw, Peter & Mistiaen, Johan & Ozler, Berk, 2002. "Producing an Improved Geographic Profile of Poverty: Methodology and Evidence from Three Developing Countries," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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  6. Menno Pradhan & Laura B. Rawlings, 2002. "The Impact and Targeting of Social Infrastructure Investments: Lessons from the Nicaraguan Social Fund," World Bank Economic Review, World Bank Group, vol. 16(2), pages 275-295, August.
  7. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2003. "Micro--Level Estimation of Poverty and Inequality," Econometrica, Econometric Society, vol. 71(1), pages 355-364, January.
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  10. Elbers, Chris & Lanjouw, Jean O. & Lanjouw, Peter, 2002. "Micro-level estimation of welfare," Policy Research Working Paper Series 2911, The World Bank.
  11. Howard White, 2002. "Social funds: a review of the issues," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(5), pages 605-610.
  12. Chris Elbers & Peter F. Lanjouw & Johan A. Mistiaen & Berk Özler & Ken Simler, 2004. "On the Unequal Inequality of Poor Communities," World Bank Economic Review, World Bank Group, vol. 18(3), pages 401-421.
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  16. Dixit, Avinash K & Londregan, John, 1994. "The Determinants of Success of Special Interests in Redistributive Politics," CEPR Discussion Papers 1054, C.E.P.R. Discussion Papers.
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  18. Galasso, Emanuela & Ravallion, Martin, 2005. "Decentralized targeting of an antipoverty program," Journal of Public Economics, Elsevier, vol. 89(4), pages 705-727, April.
  19. Dasgupta, Indraneel & Kanbur, Ravi, 2001. "Class, Community, Inequality," Working Papers 127671, Cornell University, Department of Applied Economics and Management.
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  21. Francisco H.G. Ferreira, 2001. "Education for the masses? The interaction between wealth, educational and political inequalities," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(2), pages 533-552, July.
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