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Anti-Poverty Transfers and Spatial Prices in Tunisia

  • Christophe Muller

In this paper, we study the role of price correction in estimating the impact of price subsidies and anti-poverty cash transfer schemes on poverty in Tunisia. Three types of price corrections are considered: (a) no corrections; (b) living standards deflated by spatial Laspeyres price indices; (c) living standards deflated by true price indices that are estimated from a quadratic almost ideal demand system. Distinguishing these corrections and using data from Tunisia, we study the effects of the price deflation and the demand system estimation on poverty and budget leakage estimates. These effects can intervene at two stages of the estimation: (1) the calculation of the transfer levels for each household from predicted living standards, and (2) the estimation of the post-transfer poverty or budget leakage statistics. Our results show that price correction, whatever its form, may have only limited role for the assessment of anti-poverty policy in Tunisia. Correcting or not for spatial price differences, or for consumption substitution does not modify the ranking of the studied transfer policies. This is at odd with other findings in the empirical literature that price differences may be important for poverty monitoring.

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Paper provided by University of Nottingham, CREDIT in its series Discussion Papers with number 08/13.

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Handle: RePEc:not:notcre:08/13
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  1. Bigman, David & Fofack, Hippolyte, 2000. "Geographical Targeting for Poverty Alleviation: An Introduction to the Special Issue," World Bank Economic Review, World Bank Group, vol. 14(1), pages 129-45, January.
  2. Chakravarty, Satya R. & Mukherjee, Diganta, 1998. "Optimal subsidy for the poor," Economics Letters, Elsevier, vol. 61(3), pages 313-319, December.
  3. 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.
  4. Christophe Muller, 2006. "Optimising Anti-Poverty Transfers With Quantile Regressions," Working Papers. Serie AD 2006-07, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Glewwe, Paul, 1992. "Targeting assistance to the poor : Efficient allocation of transfers when household income is not observed," Journal of Development Economics, Elsevier, vol. 38(2), pages 297-321, April.
  6. Christophe MULLER and Sami BIBI, 2008. "Focused Transfer Targeting against Poverty Evidence from Tunisia," THEMA Working Papers 2008-37, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  7. Skoufias, Emmanuel & Coady, David P., 2002. "Are the welfare losses from imperfect targeting important?," FCND briefs 125, International Food Policy Research Institute (IFPRI).
  8. Park, Albert & Wang, Sangui & Wu, Guobao, 2002. "Regional poverty targeting in China," Journal of Public Economics, Elsevier, vol. 86(1), pages 123-153, October.
  9. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July.
  10. Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-21, May.
  11. Creedy, John, 1996. "Comparing Tax and Transfer Systems: Poverty, Inequality and Target Efficiency," Economica, London School of Economics and Political Science, vol. 63(250), pages S163-74, Suppl..
  12. Giovanni Andrea Cornia & Frances Stewart, 1993. "Two Errors of Targeting," Innocenti Occasional Papers, Economic Policy Series iopeps93/54, UNICEF Innocenti Research Centre.
  13. repec:cup:cbooks:9780521608275 is not listed on IDEAS
  14. repec:cup:cbooks:9780521845731 is not listed on IDEAS
  15. David Coady, 2004. "Targeting Outcomes Redux," World Bank Research Observer, World Bank Group, vol. 19(1), pages 61-85.
  16. 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.
  17. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  18. Ravallion, Martin & Chao, Kalvin, 1989. "Targeted policies for poverty alleviation under imperfect information: Algorithms and applications," Journal of Policy Modeling, Elsevier, vol. 11(2), pages 213-224.
  19. Baker, Judy L. & Grosh, Margaret E., 1994. "Poverty reduction through geographic targeting: How well does it work?," World Development, Elsevier, vol. 22(7), pages 983-995, July.
  20. Datt, Gaurav & Ravallion, Martin, 1990. "Regional disparities, targeting, and poverty in India," Policy Research Working Paper Series 375, The World Bank.
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