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Estimating the Benefit Incidence of an Antipoverty Program by Propensity Score Matching

  • Jyotsna Jalan

    (Indian Statistical Institute)

  • Martin Ravallion

    (World Bank)

Income gains from participation in economic programs are estimated as the difference between income with the program and that without it. The "with" data can be collected without much difficulty. But the "without" data are fundamentally unobserved, since an individual cannot be both a participant and a non-participant of the same program. It is common practice to estimate the unobserved income without the program as income with the program minus wages received. However, there are opportunity costs of participating in the program. Ignoring these foregone incomes of participation will result in over-estimation of the gains from the program. We apply recent advances in propensity-score matching methods (PSM) to the problem of estimating the distribution of net income gains from an Argentinean workfare program. PSM allows us to draw a statistical comparison group to workfare participants from a larger contemporaneous and comparable survey of non-participants. The average incomes of the comparison group are compared with the average incomes of the participants to assess the direct income gains from the program. The average gain is found to be about half the gross wage. Over half of the beneficiaries are in the poorest decile nationally, and 80% are in the poorest quintile. Our PSM estimator is reasonably robust to a number of changes in methodology, including a instrumental variables test for selection bias after matching.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0873.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:0873
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  1. Besley, T., 1988. "Workfare Vs. Welfare: Incentive Arguments For Work Requirements In Poverty Alleviation Programs," Papers 142, Princeton, Woodrow Wilson School - Public and International Affairs.
  2. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
  3. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
  4. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
  5. Daniel Friedlander & David H. Greenberg & Philip K. Robins, 1997. "Evaluating Government Training Programs for the Economically Disadvantaged," Journal of Economic Literature, American Economic Association, vol. 35(4), pages 1809-1855, December.
  6. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  7. Datt, Gaurav & Ravallion, Martin, 1994. "Transfer Benefits from Public-Works Employment: Evidence for Rural India," Economic Journal, Royal Economic Society, vol. 104(427), pages 1346-69, November.
  8. 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.
  9. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657 Elsevier.
  10. Ravallion, Martin, 1999. "Appraising Workfare," World Bank Research Observer, World Bank Group, vol. 14(1), pages 31-48, February.
  11. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
  12. Manski, Charles F & Lerman, Steven R, 1977. "The Estimation of Choice Probabilities from Choice Based Samples," Econometrica, Econometric Society, vol. 45(8), pages 1977-88, November.
  13. Rajeev H. Dehejia & Sadek Wahba, 1998. "Causal Effects in Non-Experimental Studies: Re-Evaluating the Evaluation of Training Programs," NBER Working Papers 6586, National Bureau of Economic Research, Inc.
  14. K. Subbarao, 1997. "Public Works as an Anti-Poverty Program: An Overview of Cross-Country Experience," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 678-683.
  15. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-64, July.
  16. Ravallion, Martin, 1991. "Reaching the Rural Poor through Public Employment: Arguments, Evidence, and Lessons from South Asia," World Bank Research Observer, World Bank Group, vol. 6(2), pages 153-75, July.
  17. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
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