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Distributional outcomes of a decentralized welfare program

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  • Galasso, Emanuela
  • Ravallion, Martin

Abstract

It is common for central governments, to delegate authority over the targeting of welfare programs to local community organizations - which may be better informed about who is poor, though possibly less accountable for getting the money to the local poor - while the center retains control over how much goes to each local region. The authors outline a theoretical model of the interconnected behavior of the various actors in such a setting. The model's information structure provides scope for econometric identification. Applying data for a specific program in Bangladesh, they find that overall targeting was mildly pro-poor, mostly because of successful targeting within villages. But this varied across villages. Although some village characteristics promoted better targeting, these were generally not the same characteristics that attracted resources from the center. The authors observe that the center's desire for broad geographic coverage, appears to have severely constrained the scope for pro-poor village targeting. However, poor villages tended not to be better at reaching their poor. They find some evidence that local institutions matter. The presence of cooperatives for farmers and the landless, appears to be associated with more pro-poor program targeting. The presence of recreational clubs has the opposite effect. Sometimes the benefits of decentralized social programs are captured by local elites, depending on the type of spending being decentralized. When public spending us on private (excludable) good, and there is no self-targeting mechanism to ensure that only the poor participate, there is ample scope for local mis-targeting.

Suggested Citation

  • Galasso, Emanuela & Ravallion, Martin, 2000. "Distributional outcomes of a decentralized welfare program," Policy Research Working Paper Series 2316, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2316
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bardhan, Pranab & Mookherjee, Dilip, 1999. "Relative Capture of Local and Central Governments: An Essay in the Political Economy of Decentralization," Center for International and Development Economics Research (CIDER) Working Papers 233624, University of California-Berkeley, Department of Economics.
    2. Rai, Ashok S., 2002. "Targeting the poor using community information," Journal of Development Economics, Elsevier, vol. 69(1), pages 71-83, October.
    3. Das Gupta, Monica*Grandvoinnet, Helene*Romani, M, 2003. "Fostering community-driven development - What role for the State?," Policy Research Working Paper Series 2969, The World Bank.
    4. Upasak Das, 2015. "Rationing and Accuracy of Targeting in India: The Case of the Rural Employment Guarantee Act," Oxford Development Studies, Taylor & Francis Journals, vol. 43(3), pages 361-378, September.
    5. Susan Steiner, 2005. "Decentralisation and Poverty Reduction: A Conceptual Framework for the Economic Impact," Public Economics 0508006, University Library of Munich, Germany.
    6. Pritchett, Lant, 2005. "The political economy of targeted safety nets," Social Protection and Labor Policy and Technical Notes 31498, The World Bank.
    7. World Bank, 2002. "Poverty in Bangladesh : Building on Progress," World Bank Other Operational Studies 15303, The World Bank.
    8. Bardhan, Pranab & Mookherjee, Dilip, 2006. "Pro-poor targeting and accountability of local governments in West Bengal," Journal of Development Economics, Elsevier, vol. 79(2), pages 303-327, April.
    9. Billy Jack, 2003. "Poverty Reduction Using Self-Interested Intermediaries: Implications for the Design of Inter-Governmental Transfers," Working Papers gueconwpa~03-03-18, Georgetown University, Department of Economics.
    10. Ashok S. Rai, "undated". "Targeting the Poor Using Community Information," CID Working Papers 22, Center for International Development at Harvard University.
    11. Bardhan, Pranab & Mookherjee, Dilip, 2005. "Decentralizing antipoverty program delivery in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 675-704, April.
    12. Kochar, Anjini, 2008. "Schooling, wages and profits: Negative pecuniary externalities from schooling and their consequences for schooling investments," Journal of Development Economics, Elsevier, vol. 86(1), pages 76-95, April.
    13. Jayne, Thomas S. & Strauss, John & Yamano, Takashi & Molla, Daniel, 2002. "Targeting of food aid in rural Ethiopia: chronic need or inertia?," Journal of Development Economics, Elsevier, vol. 68(2), pages 247-288, August.
    14. Jayne, T. S. & Strauss, John & Yamano, Takashi & Molla, Daniel, 2001. "Giving to the Poor? Targeting of Food Aid in Rural Ethiopia," World Development, Elsevier, vol. 29(5), pages 887-910, May.
    15. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
    16. World Bank & Asian Development Bank, 2003. "Bangladesh : Public Expenditure Review," World Bank Other Operational Studies 13875, The World Bank.
    17. Faguet, Jean-Paul, 2003. "Decentralization and local government in Bolivia : an overview from the bottom up," LSE Research Online Documents on Economics 481, London School of Economics and Political Science, LSE Library.
    18. International Monetary Fund, 2001. "Fiscal Decentralization and Governance; A Cross-Country Analysis," IMF Working Papers 01/71, International Monetary Fund.
    19. Sumarto, Sudarno & Suryahadi, Asep & Pritchett, Lant, 2003. "Safety Nets or Safety Ropes? Dynamic Benefit Incidence of Two Crisis Programs in Indonesia," World Development, Elsevier, vol. 31(7), pages 1257-1277, July.
    20. Dinar, Ariel & Kemper, Karin & Blomquist, William & Kurukulasuriya, Pradeep, 2006. "The Process and Performance of Decentralization of River Basin Resource Management: A Global Analysis," 2006 Annual meeting, July 23-26, Long Beach, CA 21093, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    21. Van de Walle, Dominique, 2002. "The static and dynamic incidence of Vietnam's public safety net," Policy Research Working Paper Series 2791, The World Bank.

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