Efficient delivery of subsidies to the poor: Improving the design of a cash transfer program in Ecuador
Many governments provide monetary transfers to low-income families. The mechanism through which these subsidies are distributed may contain several inefficiencies that diminish the net-value obtained by the recipients. In this paper, we build and estimate a behavioral dynamic model that allows us to evaluate the efficiency of current and alternative distribution mechanisms. The proposed model is simple and resembles the individual's decision to collect the transfer. To estimate it, we use data from a cash transfer program in Ecuador where recipients incur high transaction costs each time they collect their benefits. Despite its simplicity, our model is able to replicate the observed data remarkably well. We use it to simulate alternative payment mechanisms and show that an adequate design of the delivery of payments can substantially increase the value of cash transfer 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.:
- Berkovec, James & Stern, Steven, 1991. "Job Exit Behavior of Older Men," Econometrica, Econometric Society, vol. 59(1), pages 189-210, January.
- Keane, Michael P & Wolpin, Kenneth I, 1994.
"The Solution and Estimation of Discrete Choice Dynamic Programming Models by Simulation and Interpolation: Monte Carlo Evidence,"
The Review of Economics and Statistics,
MIT Press, vol. 76(4), pages 648-672, November.
- Michael P. Keane & Kenneth I. Wolpin, 1994. "The solution and estimation of discrete choice dynamic programming models by simulation and interpolation: Monte Carlo evidence," Staff Report 181, Federal Reserve Bank of Minneapolis.
- Mauricio Leon & Stephen Younger, 2007. "Transfer payments, mothers' income and child health in ecuador," Journal of Development Studies, Taylor & Francis Journals, vol. 43(6), pages 1126-1143.
- Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
- Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
- Paul Schultz, T., 2004. "School subsidies for the poor: evaluating the Mexican Progresa poverty program," Journal of Development Economics, Elsevier, vol. 74(1), pages 199-250, June.
- T. Paul Schultz, 2001. "School Subsidies for the Poor: Evaluating the Mexican Progresa Poverty Program," Working Papers 834, Economic Growth Center, Yale University.
- Paxson, Christina & Schady, Norbert, 2007. "Does money matter ? The effects of cash transfers on child health and development in rural Ecuador," Policy Research Working Paper Series 4226, The World Bank.
- Behrman, Jere R & Sengupta, Piyali & Todd, Petra, 2005. "Progressing through PROGRESA: An Impact Assessment of a School Subsidy Experiment in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 237-275, October.
- Schady, Norbert & Araujo, Maria Caridad, 2006. "Cash transfers, conditions, school enrollment, and child work : evidence from a randomized experiment in Ecuador," Policy Research Working Paper Series 3930, The World Bank.
- Rawlings, Laura B.*Rubio, Gloria M., 2003. "Evaluating the impact of conditional cash transfer programs : lessons from Latin America," Policy Research Working Paper Series 3119, The World Bank.
- Keane, Michael P & Wolpin, Kenneth I, 2001. "The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 1051-1103, November.
- FranÁois Bourguignon & Francisco H. G. Ferreira & Phillippe G. Leite, 2003. "Conditional Cash Transfers, Schooling, and Child Labor: Micro-Simulating Brazil's Bolsa Escola Program," World Bank Economic Review, World Bank Group, vol. 17(2), pages 229-254, December. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:90:y:2009:i:2:p:276-284. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.