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Targeting Social Transfers to the Poor in Mexico

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  • David Coady
  • Susan Parker

Abstract

Mexico’s main social support program, Oportunidades, combines two methods to target cash to poor households: an initial self-selection by households who acquire knowledge about the program and apply for benefits, followed by an administrative determination of eligibility based on a means test. Self-selection improves targeting by excluding high-income households, while administrative targeting does so mainly by excluding middle-income households. The two methods are complementary: expanding program knowledge across households substantially increases applications from non-poor households, thus reinforcing the importance of administrative targeting. The paper shows that targeting can be further improved through redesigning the means test and differentiating transfers according to demographic characteristics.

Suggested Citation

  • David Coady & Susan Parker, 2009. "Targeting Social Transfers to the Poor in Mexico," IMF Working Papers 09/60, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:09/60
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    References listed on IDEAS

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    1. Stephen Pudney & Monica Hernandez & Ruth Hancock, 2007. "The welfare cost of means-testing: pensioner participation in income support," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 581-598.
    2. James J. Heckman & Jeffrey A. Smith, 2004. "The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 243-298, April.
    3. David Coady & Margaret Grosh & John Hoddinott, 2004. "Targeting of Transfers in Developing Countries : Review of Lessons and Experience," World Bank Publications, The World Bank, number 14902.
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    5. César Martinelli & Susan Wendy Parker, 2009. "Deception and Misreporting in a Social Program," Journal of the European Economic Association, MIT Press, vol. 7(4), pages 886-908, June.
    6. Coady, David P. & Grosh, Margaret & Hoddinott, John, 2002. "Targeting outcomes redux," FCND discussion papers 144, International Food Policy Research Institute (IFPRI).
    7. Angus Deaton & Christina Paxson, 1998. "Economies of Scale, Household Size, and the Demand for Food," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 897-930, October.
    8. David Coady, 2004. "Targeting Outcomes Redux," World Bank Research Observer, World Bank Group, vol. 19(1), pages 61-85.
    9. Blundell, Richard & Fry, Vanessa & Walker, Ian, 1987. "Modelling the Take-up of Means-tested Benefits: the Case of Housing Benefits in the United Kingdom," Economic Journal, Royal Economic Society, vol. 98(390), pages 58-74, Supplemen.
    10. David Coady, 2006. "The Welfare Returns to Finer Targeting: The Case of The Progresa Program in Mexico," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(2), pages 217-239, May.
    11. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    13. Micklewright, John & Coudouel, Aline & Marnie, Sheila, 2004. "Targeting and Self-Targeting in a New Social Assistance Scheme," IZA Discussion Papers 1112, Institute for the Study of Labor (IZA).
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    Citations

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    Cited by:

    1. Rema Hanna & Vivi Alatas & Abhijit Banerjee & Benjamin A. Olken & Ririn Purnamasari & Matthew Wai-Poi & Christian Daude, 2012. "Ordeal Mechanisms in Targeting: Theory and Evidence from a Field Experiment in Indonesia," CID Working Papers 254, Center for International Development at Harvard University.
    2. Armando Barrientos & Juan Miguel Villa, 2014. "Economic and political inclusion of human development conditional transfer programmes in Latin America?," Brooks World Poverty Institute Working Paper Series 20014, BWPI, The University of Manchester.
    3. Mohamed Bakhshoodeh, 2013. "Proxy Means Tests for Targeting Subsidies Scheme in Iran," Working Papers 795, Economic Research Forum, revised Nov 2013.

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