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Targeting and child poverty

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  • Olivier Bargain
  • Olivier Donni

    ()

Abstract

We examine the relative merits of targeting children within the household through price subsidies and cash transfers. To do so, we model the behavior of a household composed of one adult and one child. We then show that ‘favorable’ distortions from price subsidies may allow redistributing toward the child and then derive the conditions under which this redistributive scheme is more efficient than cash transfers. The framework is extended to account for possible paternalistic preferences of the social planner and for households composed of two adults with different preferences. Applied to a continuum of households, our approach is extended to the problem of child poverty alleviation. In contrast to the traditional view, we show that well-chosen subsidies may be more cost effective than cash transfers in reducing child poverty. Copyright Springer-Verlag 2012

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File URL: http://hdl.handle.net/10.1007/s00355-011-0556-z
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Article provided by Springer & The Society for Social Choice and Welfare in its journal Social Choice and Welfare.

Volume (Year): 39 (2012)
Issue (Month): 4 (October)
Pages: 783-808

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Handle: RePEc:spr:sochwe:v:39:y:2012:i:4:p:783-808
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Find related papers by JEL classification:
  • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
  • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
  • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
  • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
  • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

References listed on IDEAS
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  1. Dauphin, Anyck & El Lahga, AbdelRahmen & Fortin, Bernard & Lacroix, Guy, 2008. "Are Children Decision-Makers Within the Household?," IZA Discussion Papers 3728, Institute for the Study of Labor (IZA).
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  3. Cigno, Alessandro & Luporini, Annalisa & Pettini, Anna, 2003. "Transfers to families with children as a principal-agent problem," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1165-1177, May.
  4. Bourguignon, F., 1999. "The Cost of Children: May the Collective Approach to Household Behavior Help?," DELTA Working Papers 1999-01, DELTA (Ecole normale supérieure).
  5. Cremer, Helmuth & Pestieau, Pierre, 2001. "Non-linear taxation of bequests, equal sharing rules and the tradeoff between intra- and inter-family inequalities," Journal of Public Economics, Elsevier, vol. 79(1), pages 35-53, January.
  6. Besley, Timothy J & Kanbur, S M Ravi, 1988. "Food Subsidies and Poverty Alleviation," Economic Journal, Royal Economic Society, vol. 98(392), pages 701-19, September.
  7. Haddad, Lawrence & Kanbur, Ravi, 1991. "Intrahousehold inequality and the theory of targeting," Policy Research Working Paper Series 789, The World Bank.
  8. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
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  14. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June.
  15. Geoffrey Dunbar & Arthur Lewbel & Krishna Pendakur, 2010. "Children's Resources in Collective Households: Identification, Estimation and an Application to Child Poverty in Malawi," Boston College Working Papers in Economics 758, Boston College Department of Economics, revised 31 Jan 2012.
  16. Christiansen, Vidar, 1983. " Some Important Properties of the Social Marginal Utility of Income," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(3), pages 359-71.
  17. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, November.
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  19. Richard Dickens & David T Ellwood, 2003. "Child Poverty in Britain and the United States," Economic Journal, Royal Economic Society, vol. 113(488), pages F219-F239, 06.
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  22. Besley, Timothy, 1990. "Means Testing versus Universal Provision in Poverty Alleviation Programmes," Economica, London School of Economics and Political Science, vol. 57(225), pages 119-29, February.
  23. Olivier Donni, 2009. "A Simple Approach to Investigate Intrahousehold Allocation of Private and Public Goods," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 617-628, August.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Transfers to mothers may hurt children
    by Economic Logician in Economic Logic on 2011-05-19 14:39:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:

  1. Bargain, Olivier & Donni, Olivier, 2009. "The Measurement of Child Costs: A Rothbarth-Type Method Consistent with Scale Economies," IZA Discussion Papers 4654, Institute for the Study of Labor (IZA).
  2. Olivier Bargain & Olivier Donni, 2011. "Optimal Commodity Taxation and Redistribution within Households," Working Papers 201107, School of Economics, University College Dublin.
  3. BARGAIN Olivier & DONNI Olivier, 2010. "The Measurement of Child Costs: A Rothbarth-Type Method Consistent with Scale Economies and Parents? Bargaining," LISER Working Paper Series 2010-30, LISER.
  4. Bargain, Olivier & Donni, Olivier & Kwenda, Prudence, 2014. "Intrahousehold distribution and poverty: Evidence from Côte d'Ivoire," Journal of Development Economics, Elsevier, vol. 107(C), pages 262-276.
  5. Jean-paul Chavas & Martina Menon & Elisa Pagani & Federico Perali, 2015. "Collective Household Welfare and Intra-household Inequality," Working Papers 13/2015, University of Verona, Department of Economics.

This item is featured on the following reading lists or Wikipedia pages:

  1. Economic Logic blog

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