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The impact of pro-vulnerable income transfers : Leisure, dependency and a distribution hypothesis

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  • Limodio, Nicola

Abstract

This paper studies a transmission mechanism through which pro-vulnerable income transfers may affect individual decision-making of non-beneficiaries in an extreme poverty context, leading to labor supply contraction and the so-called dependency syndrome. The argument is based on the distributional distortion this transfer may provoke to the relative quality of leisure, enjoyed by the population in an extreme poverty scenario. Assuming the existence of vulnerable individuals and different income groups based on certain physical, economic, or social characteristics, the author studies their decision processes and, in particular, their reactions to the aid program. The results of this theoretical research provide some insights on the conditions that an optimal pro-poor income transfer should present. A literature review is presented in support of the arguments made in the theoretical part.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5881.

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Date of creation: 01 Nov 2011
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Handle: RePEc:wbk:wbrwps:5881

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Keywords: Labor Policies; Poverty Monitoring&Analysis; Economic Theory&Research; Services&Transfers to Poor; Food&Beverage Industry;

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  1. Jef Leroy & Marie Ruel & Ellen Verhofstadt, 2009. "The impact of conditional cash transfer programmes on child nutrition: a review of evidence using a programme theory framework," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 1(2), pages 103-129.
  2. Abdulai, Awudu & Barrett, Christopher B. & Hazell, Peter, 2004. "Food aid for market development in Sub-Saharan Africa," DSGD discussion papers 5, International Food Policy Research Institute (IFPRI).
  3. Liutang Gong & Heng-fu Zou, 2001. "Foreign Aid Reduces Labor Supply and Capital Accumulation," CEMA Working Papers 56, China Economics and Management Academy, Central University of Finance and Economics.
  4. Bazoumana Ouattara, 2007. "Foreign Aid, Public Savings Displacement and Aid Dependency in Cote d'Ivoire: An Aid Disaggregation Approach," Oxford Development Studies, Taylor & Francis Journals, vol. 35(1), pages 33-46.
  5. Jayne, Thomas S. & Strauss, John & Yamano, Takashi & Molla, Daniel, 2002. "Targeting of food aid in rural Ethiopia: chronic need or inertia?," Journal of Development Economics, Elsevier, vol. 68(2), pages 247-288, August.
  6. Marie Gaarder & Amanda Glassman & Jessica Todd, 2010. "Conditional cash transfers and health: unpacking the causal chain," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 2(1), pages 6-50.
  7. van de Walle, Dominique, 1998. "Targeting Revisited," World Bank Research Observer, World Bank Group, vol. 13(2), pages 231-48, August.
  8. Lykke E. Andersen & Bent Jesper Christensen & Oscar Molina, 2005. "The Impact of Aid on Recipient Behavior: A Micro-Level Dynamic Analysis of Remittances, Schooling, Work, Consumption, Investment and Social Mobility in Nicaragua," Development Research Working Paper Series 02/2005, Institute for Advanced Development Studies.
  9. Clay, Daniel C. & Molla, Daniel & Habtewold, Debebe, 1999. "Food aid targeting in Ethiopia: A study of who needs it and who gets it," Food Policy, Elsevier, vol. 24(4), pages 391-409, August.
  10. Chatterjee, Santanu & Turnovsky, Stephen J., 2007. "Foreign aid and economic growth: The role of flexible labor supply," Journal of Development Economics, Elsevier, vol. 84(1), pages 507-533, September.
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