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Chapter 13 Social%20programs-10

Chapter 13 Social%20programs-10 - de Janvry and Sadoulet...

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de Janvry and Sadoulet 1 Chapter 13 Targeting of social programs Revised October 25, 2010 I. Social assistance in poverty reduction strategies Reducing poverty requires raising the incomes of the poor. This can originate in either an enhanced capacity of the poor to generate earned incomes or in targeted transfers in cash or kind. For given characteristics of the poor such as gender, age, and ethnicity, the first can be achieved through three types of interventions: (1) A increased control over productive assets by the poor. Assets consist in five types of capital: Natural capital (land, water, animals), physical capital (tools, implements, constructions), human capital (health, education, skills), financial capital (liquid assets, food stocks, jewelry), and social capital (network membership, social status). (2) An improvement in the quality of the context where these assets are used to allow efficiency and productivity gains. An efficiency gain is a move along the production function to the point where factors of production are optimally used for profit maximization. A productivity gain is a shift in the production such as TFP growth in the Solow model. An improvement in the quality of context includes improved opportunities created by growth (employment and investment opportunities), improved access to markets (infrastructure, competition), new financial services (for savings, credit, insurance, and transactions), and public goods (technology, property rights, public services). (3) Changes in behavior that help overcome procrastination, reduce risk aversion, support coordination and cooperation, and induce investment and the quest for efficiency gains. The second consists in social assistance programs with income or consumption transfers to the poor and with instruments to cope with shocks. Take home messages for Chapter 13 1. Social assistance programs can be aimed at reducing chronic poverty and vulnerability to shocks, and at enhancing risk-coping to protect either consumption or household assets when shocks occur. 2. These programs need to be targeted because budgets are limited. Targeting must be done to minimize both errors of exclusion (Type I) and of inclusion (Type II). 3. Targeting most often requires identifying specific individuals or households in poverty. Approaches include means tests, proxy means tests, community targeting, and conditional targeting. 4. Targeting can alternatively seek to identify categories of individuals or of households in poverty. Approaches include geographical and demographic targeting. 5. An appealing approach is self-targeting achieved by introducing a cost to participation that only the poor will be willing to incur. This includes queuing, stigma, inferior goods, and work requirements. 6. Targeting implies many difficult trade-offs that need to be addressed including between accuracy and effective budgets, low inclusion errors and political support, gender roles and effectiveness, community participation and risks of capture, and incidence of benefits and costs across social classes.
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