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Does Elite Capture Matter? Local Elites and Targeted Welfare Programs in Indonesia

Author

Listed:
  • Vivi Alatas
  • Abhijit Banerjee
  • Rema Hanna
  • Benjamin A. Olken
  • Ririn Purnamasari
  • Matthew Wai-Poi

Abstract

This paper investigates the impact of elite capture on the allocation of targeted government welfare programs in Indonesia, using both a high-stakes field experiment that varied the extent of elite influence and non-experimental data on a variety of existing government transfer programs. Conditional on their consumption level, there is little evidence that village elites and their relatives are more likely to receive aid programs than non-elites. However, this overall result masks stark differences between different types of elites: those holding formal leadership positions are more likely to receive benefits, while informal leaders are less likely to receive them. We show that capture by formal elites occurs when program benefits are actually distributed to households, and not during the processes of determining who should be on the beneficiary lists. However, while elite capture exists, the welfare losses it creates appear small: since formal elites and their relatives are only 9 percent richer than non-elites, are at most about 8 percentage points more likely to receive benefits than non-elites, and represent at most 15 percent of the population, eliminating elite capture entirely would improve the welfare gains from these programs by less than one percent.

Suggested Citation

  • Vivi Alatas & Abhijit Banerjee & Rema Hanna & Benjamin A. Olken & Ririn Purnamasari & Matthew Wai-Poi, 2013. "Does Elite Capture Matter? Local Elites and Targeted Welfare Programs in Indonesia," NBER Working Papers 18798, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18798
    Note: PE POL DEV
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    Cited by:

    1. Abhijit V. Banerjee, 2016. "Policies for a better-fed world," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 3-17, February.
    2. Abhijit V. Banerjee & Esther Duflo, 2014. "Under the Thumb of History? Political Institutions and the Scope for Action," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 951-971, August.
    3. Muhammad Haseeb & Kate Vyborny, 2016. "Imposing institutions: Evidence from cash transfer reform in Pakistan," CSAE Working Paper Series 2016-36, Centre for the Study of African Economies, University of Oxford.
    4. Schleicher, Michael & Souares, Aurélia & Pacere, Athanase Narangoro & Sauerborn, Rainer & Klonner, Stefan, 2016. "Decentralized versus Statistical Targeting of Anti-Poverty Programs: Evidence from Burkina Faso," Working Papers 0623, University of Heidelberg, Department of Economics.
    5. Abhijit Banerjee, 2015. "Policies for a Better-fed World," NBER Working Papers 21623, National Bureau of Economic Research, Inc.
    6. L. Kempen, 2014. "Mansuri, Ghazala and Rao, Vijayendra: Localizing development. Does participation work?," Journal of Economics, Springer, vol. 112(2), pages 201-205, June.
    7. Tohari, Achmad & Parsons, Christopher & Rammohan, Anu, 2017. "Does Information Empower the Poor? Evidence from Indonesia's Social Security Card," IZA Discussion Papers 11137, Institute for the Study of Labor (IZA).
    8. Nasrudin, Rus'an, 2015. "Does Soft Corruption Make Grease or Sand for Development? Evidence from Road's Special Allocation Fund for Indonesian Districts," MPRA Paper 80578, University Library of Munich, Germany, revised 08 Aug 2017.
    9. Bah, Adama & Bazzi, Samuel & Sumarto, Sudarno & Tobias, Julia, 2014. "Finding the Poor vs. Measuring Their Poverty: Exploring the Drivers of Targeting Effectiveness in Indonesia," MPRA Paper 59759, University Library of Munich, Germany.
    10. Abhijit Banerjee, 2015. "Policies for a Better-Fed World," Working Papers id:7623, eSocialSciences.
    11. repec:eee:pubeco:v:156:y:2017:i:c:p:150-169 is not listed on IDEAS
    12. Duflo, Esther & Dupas, Pascaline & Kremer, Michael, 2015. "School governance, teacher incentives, and pupil–teacher ratios: Experimental evidence from Kenyan primary schools," Journal of Public Economics, Elsevier, vol. 123(C), pages 92-110.
    13. Antonio Estache, 2016. "Institutions for Infrastructure in Developing Countries: What We Know and the Lot We still Need to Know," Working Papers ECARES ECARES 2016-27, ULB -- Universite Libre de Bruxelles.
    14. Fafchamps, Marcel, 2016. "Family Networks and Distributive Politics," CEPR Discussion Papers 11245, C.E.P.R. Discussion Papers.
    15. Abhijit Banerjee, 2016. "Policies for a better-fed world," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 3-17, February.
    16. Pranab Bardhan, 2016. "State and Development: The Need for a Reappraisal of the Current Literature," Journal of Economic Literature, American Economic Association, vol. 54(3), pages 862-892, September.
    17. Raj M. Desai & Shareen Joshi, 2014. "Collective Action and Community Development: Evidence from Self-Help Groups in Rural India," World Bank Economic Review, World Bank Group, vol. 28(3), pages 492-524.

    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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