Publication: Assessing the Targeting System in Georgia: Proposed Reform Options
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2020-07
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2020-08-13
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This paper investigates reasons of Georgian targeted social assistance (TSA)’s declining performance and presents a new proxy means test (PMT) model estimated on the most recent household income and expenditure survey data (2018). The paper finds that the presented updated formula performs better in terms of its ranking property, coverage of the poor, and benefit incidence among the poor. The updated PMT formula will improve the coverage of the poorest decile by raising it from 69 percent to 77 percent and the benefit incidence in the poorest decile from 60 to 65 percent. The analysis also finds that most of the winners are in the poorest quintile while the losers in the top quintiles. In the medium term, the paper highlights the potential benefits of moving to a hybrid targeting approach, whereby reported income is used as a first-stage exclusion criterion before a PMT assessment.
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“Sormani, Roberto Claudio; Honorati, Maddalena; Carraro, Ludovico. 2020. Assessing the Targeting System in Georgia: Proposed Reform Options. Social Protection and Jobs Discussion Paper;No. 2005. © World Bank. http://hdl.handle.net/10986/34358 License: CC BY 3.0 IGO.”
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Publication A Review of the Targeting System in Georgia(World Bank, Washington, DC, 2020-06-25)This paper first reviews the performance of the current targeting system and recommends improvements to the existing PMT formula. One implementation issue we identified is the inconsistency in how monetary and nonmonetary values are treated when calculating the PMT score. The practice has been to calculate the score based on monetary variables (income, social benefits package, and utility expenditures) at current nominal prices, which have inevitably inflated the predicted consumption. As the PMT formula was estimated at 2013 prices, the recommendation to correctly implement the current PMT formula would be to deflate all monetary variables to 2013 prices. Second, to further improve the poverty targeting accuracy, the paper presents the updated PMT model estimation and discusses the benefits and cost of transitioning to the new PMT formula. 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