Macro Crises and Targeting Transfers to the Poor

A central question for policy makers concerned with helping the poor through a macro crisis is how to target scarcer resources at a time of greater need. Technical arguments suggest that finer targeting through tightening individual programs or reallocation resources towards more tightly targeted programs uses resources more efficiently for poverty reduction. These arguments survive even when the greater informational costs and the incentive effects of finer targeting are taken into account. But political economy arguments suggest that finer targeting will end up with fewer resources allocated to that program, and that looser targeting, because it knits together the interests of the poor and the near poor, may generate greater resources and hence be more effective for poverty reduction despite being 'leakier.' Overall the policy advice to tighten targeting and to avoid more loosely targeted programs during crises needs to be given with consideration caution. However, the advice to design transfer systems with greater flexibility, in the technical and the political economy senses, is strengthened by the arguments presented here. The case for external assistance to design flexible transfer systems ex ante and to relieve the painful tradeoffs in targeting during a crisis is also shown to be strong.

Bibliographic Details

Main Author:	Kanbur, Ravi
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2010
Subjects:	ADMINISTRATIVE COSTS, AVERAGE INCOMES, BASIC NEEDS, CASH TRANSFERS, CLIMATE CHANGE, COMMODITY GROUPS, CONSUMPTION SMOOTHING, COUNTRY CASE, DECOMPOSABLE POVERTY MEASURES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT PRACTITIONERS, DEVELOPMENT REPORT, DEVELOPMENT RESEARCH, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC STUDIES, ECONOMICS, FINANCIAL CRISIS, FLEXIBILITY, FOOD SUBSIDIES, HEADCOUNT RATIO, HOUSEHOLD SURVEY, HUMAN DEVELOPMENT, IDIOSYNCRATIC SHOCKS, INCENTIVE COSTS, INCOME, INCOME DISTRIBUTION, INCOMES INCREASE, INCREASE POVERTY, INDICATOR TARGETING, INDUSTRIALIZED COUNTRIES, INEQUALITY, INEQUALITY FALLS, INSURANCE, INTERVENTIONS, LONG RUN, MARGINAL TAX, MARGINAL TAX RATE, MARGINAL TAX RATES, MEANS TESTING, NUTRITION, OPTIMUM INCOME TAXATION, PERFECT TARGETING, POLICY CHANGES, POLICY MAKERS, POLICY OPTIONS, POLICY RESEARCH, POLITICAL ECONOMY, POLITICAL ECONOMY ANALYSIS, POLITICAL SUPPORT, POOR, POOR COUNTRIES, POOR PERSON, POVERTY ALLEVIATION, POVERTY ALLEVIATION PROGRAMS, POVERTY GAP, POVERTY IMPACT, POVERTY INCIDENCE, POVERTY LINE, POVERTY MEASURES, POVERTY MINIMIZATION, POVERTY REDUCTION, POVERTY STATUS, PRO POOR, PUBLIC EXPENDITURE, PUBLIC POLICY, PUBLIC WORKS, REDISTRIBUTIVE POLICIES, RICH COUNTRIES, RISK SHARING, RURAL, RURAL EMPLOYMENT, RURAL HOUSEHOLDS, SAFETY NETS, SELF TARGETING, SOCIAL PROTECTION, SQUARED POVERTY GAP, TARGETING, TAXATION, TRANSFER PROGRAMS, WAGES, WELL BEING,
Online Access:	http://documents.worldbank.org/curated/en/504701468325185635/Macro-crises-and-targeting-transfers-to-the-poor http://hdl.handle.net/10986/27786
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