Benefit incidence analysis in developing countries
As interesting and difficult as it is to allocate tax burdens to individuals, the profession knows even less about allocating benefits. The authors survey the literature on benefit incidence since DeWulf's (1975) review, focusing on the methodology and results of benefit incidence analysis in developing countries. Research in this area faces all the general-equilibrium difficulties faced by tax incidence analysis as well as the difficult task of measuring benefits from publicly provided goods and services. Despite the inherent pitfalls of this methodology, the authors believe that benefit incidence analysis can provide an important perspective on the budget by combining data on household use with data on project costs. In particular, benefit incidence analyses can help illuminate the distributional impacts of proposed reallocations of government resources among projects. The value of such research is especially high considering the scarcity of recent research in this area. The authors review the existing methodology, survey the available results, and point out areas in which further research might have large payoffs. They also make specific methodological suggestions that might help ensure that future research is as useful for policymakers as possible. For example: Aggregate results based on the zero-government counterfactual rely on strong assumptions about fixed relative prices and incomes, government efficiency, and the relationship between marginal and total benefits. And those studies are often not designed to identify which types of public services benefit the poor. Researchers should focus more on providing benefit incidence studies on specific government functions or programs that can help policymakers reach conclusions about proposed reallocations of resources among government programs. Benefit incidence should be assigned to households based on household survey information on usage rather than on ad hoc assumptions that assign benefits based on income or the number of members in the household. Improved annual cost measures for services need to be developed, particulary for capital inputs. Researchers should group households by deciles and whenever possible should consider other groupings based on household income adjusted for household composition, age, location, and other relevant socioeconomic variables. Careful attention to life-cycle benefits, benefit shifting, rent-seeking, out-of-pocket costs, displacement of private sector efforts, average versus marginal incidence, and several other issues can significantly increase the value of benefit incidence analysis to policymakers.
|Date of creation:||30 Nov 1992|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Suits, Daniel B, 1977. "Measurement of Tax Progressivity," American Economic Review, American Economic Association, vol. 67(4), pages 747-52, September.
- Anwar M. Chaudry-Shah, 1989. "A Capitalization Approach to Fiscal Incidence at the Local Level," Land Economics, University of Wisconsin Press, vol. 65(4), pages 359-375.
- Le Grand, Julian, 1982. "The Distribution of Public Expenditure on Education," Economica, London School of Economics and Political Science, vol. 49(193), pages 63-68, February.
- Berhman, J.R. & Deolaikar, A.B., 1990. "The Poor And The Social Sectors During A Period Of Macroeconomic Adjustment: Empirical Evidence For Jamaica," Department of Economics Working Papers 152, Department of Economics, Williams College.
- repec:hoo:wpaper:e-88-20 is not listed on IDEAS
- Gertler, P. & Glewwe, P., 1989. "The Willingness To Pay For Education In Developing Countries," Papers 54, World Bank - Living Standards Measurement.
- Thomas W. Hertel, 1999.
"Applied General Equilibrium Analysis of Agricultural and Resource Policies,"
GTAP Working Papers
297, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Hertel, Thomas W., 2002. "Applied general equilibrium analysis of agricultural and resource policies," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 26, pages 1373-1419 Elsevier.
- Kanemoto, Yoshitsugu & Nakamura, Ryohei, 1986.
"A new approach to the estimation of structural equations in hedonic models,"
Journal of Urban Economics,
Elsevier, vol. 19(2), pages 218-233, March.
- Yoshitsugu Kanemoto, 1985. "A New Approach to the Estimation of Structural Equations in Hedonic Models," Working Papers 595, Queen's University, Department of Economics.
- Pechman, Joseph A, 1972. "Note on the Intergenerational Transfer of Public Higher-Education Benefits," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S256-59, Part II, .
- Richard A. Musgrave & Karl E. Case & Herman Leonard, 1974. "The Distribution of Fiscal Burdens and Benefits," Public Finance Review, , vol. 2(3), pages 259-311, July.
- Martinez-Vazquez, Jorge, 1982. "Fiscal Incidence at the Local Level," Econometrica, Econometric Society, vol. 50(5), pages 1207-18, September.
- Ravallion, Martin & Dearden, Lorraine, 1988. "Social Security in a "Moral Economy": An Empirical Analysis for Java," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 36-44, February.
- Shah, Anwar & Whalley, John, 1991. "Tax Incidence Analysis of Developing Countries: An Alternative View," World Bank Economic Review, World Bank Group, vol. 5(3), pages 535-52, September.
- Hochman, Harold M & Rodgers, James D, 1969. "Pareto Optimal Redistribution," American Economic Review, American Economic Association, vol. 59(4), pages 542-57, Part I Se.
- Jimenez, Emmanuel, 1986. "The Public Subsidization of Education and Health in Developing Countries: A Review of Equity and Efficiency," World Bank Research Observer, World Bank Group, vol. 1(1), pages 111-29, January.
- Jacob Meerman, 1980. "Are public goods public goods?," Public Choice, Springer, vol. 35(1), pages 45-57, January.
- George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
- Kanemoto, Yoshitsugu, 1988.
"Hedonic Prices and the Benefits of Public Projects,"
Econometric Society, vol. 56(4), pages 981-89, July.
- Yoshitsugu Kanemoto, 1985. "Hedonic Prices and the Benefits of Public Projects," Working Papers 617, Queen's University, Department of Economics.
- Daniel P. Hewitt, 1987. "The Benefit Incidence of Consumption Public Goods," Public Finance Review, , vol. 15(2), pages 138-165, April.
- Mohammad, Sharif & Whalley, John, 1984. "Rent Seeking in India: Its Costs and Policy Significance," Kyklos, Wiley Blackwell, vol. 37(3), pages 387-413.
- Robert Holzmann, 1990. "The Welfare Effects of Public Expenditure Programs Reconsidered," IMF Staff Papers, Palgrave Macmillan, vol. 37(2), pages 338-359, June.
- 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.
- Yinger, John, 1982. "Capitalization and the Theory of Local Public Finance," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 917-43, October.
- Braverman, Avishay & Stiglitz, Joseph E., 1986. "Landlords, tenants and technological innovations," Journal of Development Economics, Elsevier, vol. 23(2), pages 313-332, October.
- Alderman, Harold, 1987. "Allocation of goods through non-price mechanisms : Evidence on distribution by willingness to wait," Journal of Development Economics, Elsevier, vol. 25(1), pages 105-124, February.
- van de Walle, Dominique, 1992. "The distribution of the benefits from social services in Indonesia, 1978-87," Policy Research Working Paper Series 871, The World Bank.
- Luc De Wulf, 1975. "Fiscal Incidence Studies in Developing Countries: Survey and Critique (Etude sur l'incidence de la politique budgÃ©taire dans les pays en voie de dÃ©veloppement: examen analytique et critique) (Estudi," IMF Staff Papers, Palgrave Macmillan, vol. 22(1), pages 61-131, March.
- Davies, James B & St-Hilaire, France & Whalley, John, 1984. "Some Calculations of Lifetime Tax Incidence," American Economic Review, American Economic Association, vol. 74(4), pages 633-49, September.
- Hammes, David L & Wills, Douglas T, 1987. "Public Debt, Interest and Fiscal Incidence," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 33(4), pages 439-42, December.
- Le Grand, Julian, 1978. "The Distribution of Public Expenditure: The Case of Health Care," Economica, London School of Economics and Political Science, vol. 45(178), pages 125-42, May.
- Follain, James R. & Jimenez, Emmanuel, 1985. "Estimating the demand for housing characteristics: A survey and critique," Regional Science and Urban Economics, Elsevier, vol. 15(1), pages 77-107, February.
- Kakwani, Nanak C, 1977. "Applications of Lorenz Curves in Economic Analysis," Econometrica, Econometric Society, vol. 45(3), pages 719-27, April.
- Timothy Smeeding, 1984. "Approaches to Measuring and Valuing In-Kind Subsidies and the Distribution of Their Benefits," NBER Chapters, in: Economic Transfers in the United States, pages 139-176 National Bureau of Economic Research, Inc.
- Denzau, Arthur T & Mackay, Robert J, 1976. "Benefit Shares and Majority Voting," American Economic Review, American Economic Association, vol. 66(1), pages 69-76, March.
- Edgar O. Olsen & Kathy A. York, 1984. "The Effect of Different Measures of Benefit on Estimates of the Distributive Consequences of Government Programs," NBER Chapters, in: Economic Transfers in the United States, pages 177-198 National Bureau of Economic Research, Inc.
- Aaron, Henry & McGuire, Martin, 1970. "Public Goods and Income Distribution," Econometrica, Econometric Society, vol. 38(6), pages 907-20, November.
- De Wulf, Luc, 1981. "Incidence of Budgetary Outlays: Where Do We Go from Here?," Public Finance = Finances publiques, , vol. 36(1), pages 55-76.
- Estelle James & Gail Benjamin, 1987. "Educational Distribution and Income Redistribution through Education in Japan," Journal of Human Resources, University of Wisconsin Press, vol. 22(4), pages 469-489.
- Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
- Chaudry-Shah, Anwar, 1988. " Capitalization and the Theory of Local Public Finance: An Interpretive Essay," Journal of Economic Surveys, Wiley Blackwell, vol. 2(3), pages 209-43.
- Edward C. Kienzle, 1982. "Post-Fisc Distributions of Income: Measuring Progressivity With Application To the United States," Public Finance Review, , vol. 10(3), pages 355-368, July.
- Charles Rowley & Anne Rathbone, 2004. "Political Economy of Antitrust," Chapters, in: The International Handbook of Competition, chapter 6 Edward Elgar Publishing.
- Gertler, Paul & Locay, Luis & Sanderson, Warren, 1987.
"Are user fees regressive? : The welfare implications of health care financing proposals in Peru,"
Journal of Econometrics,
Elsevier, vol. 36(1-2), pages 67-88.
- Paul J. Gertler & Luis Locay & Warren C. Sanderson, 1987. "Are User Fees Regressive? The Welfare Implications of Health Care Financing Proposals in Peru," NBER Working Papers 2299, National Bureau of Economic Research, Inc.
- Whittington, Dale & Lauria, Donald T. & Xinming Mu, 1989. "Paying for urban services : a study of water vending and willingness to pay for water in Onitsha, Nigeria," Policy Research Working Paper Series 363, The World Bank.
- Knowles, James C. & Anker, Richard, 1981. "An analysis of income transfers in a developing country : The case of Kenya," Journal of Development Economics, Elsevier, vol. 8(2), pages 205-226, April.
- Allen, Franklin, 1982. "Optimal linear income taxation with general equilibrium effects on wages," Journal of Public Economics, Elsevier, vol. 17(2), pages 135-143, March.
- Piggott, John & Whalley, John, 1987. "Interpreting Net Fiscal Incidence Calculations," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 685-94, November.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1015. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.