Publication: Unconditional Cash Transfers in China: Who Benefits from the Rural Minimum Living Standard Guarantee (Dibao) Program?
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Published
2017-05
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0305-750X
Date
2018-01-23
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This paper analyzes China’s rural minimum living standard guarantee (dibao) program, one of the largest minimum income cash transfer schemes in the world, and examines possible changes to the program design. Despite its size and central position in China’s current poverty reduction strategy, little is known about the rural dibao program’s performance and targeting effectiveness. Our analysis uses annual household survey data from the China Household Income Project matched with published administrative data for the years 2007–09. We find that the program provides sufficient income to poor beneficiaries but does not substantially reduce the overall level of poverty. Conventional targeting analysis reveals large inclusionary and exclusionary targeting errors; propensity score targeting analysis yields smaller but still large targeting errors. Simulations of possible changes to the program design reveal that expanding coverage can potentially yield greater poverty reduction than increasing transfer amounts. Replacing locally diverse dibao lines and transfer amounts with a nationally uniform dibao threshold and transfer could in theory reduce poverty further, but the potential gains are modest without improvements in targeting. This paper makes several contributions. To our knowledge this is the first household-level empirical analysis of China’s dibao program in rural areas, so the findings provide new, policy-relevant information. Moreover, the literature has not settled the question of whether such programs should be centralized or decentralized. We show that in practice the potential gains of centralizing the eligibility rule and transfer amount are conditional on the efficiency of targeting. By varying the program’s key design parameters our analysis also yields insights into alternative policy recommendations to improve the program performance.
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Publication Unconditional Cash Transfers in China(World Bank, Washington, DC, 2015-07)This paper examines China’s rural minimum living standard guarantee (dibao) program, one of the largest minimum income cash transfer schemes in the world. Using household survey data matched with published administrative data, the paper describes the dibao program, estimates the program’s impact on poverty, and carries out targeting analysis. The analysis finds that the program provides sufficient income to poor beneficiaries but does not substantially reduce the overall level of poverty, in part because the number of beneficiaries is small relative to the number of poor. Conventional targeting analysis reveals rather large inclusionary and exclusionary targeting errors; propensity score targeting analysis yields smaller but still large targeting errors. Simulations of possible reforms to the dibao program indicate that expanding coverage can potentially yield greater poverty reduction than increasing transfer amounts. In addition, replacing locally diverse dibao lines with a nationally uniform dibao threshold could in theory reduce poverty. The potential gains in poverty reduction, however, depend on the effectiveness of targeting.Publication Any Guarantees? China's Rural Minimum Living Standard Guarantee Program(World Bank Group, Washington, DC, 2014-08)This paper examines China's rural minimum living standard guarantee (dibao) program, one of the largest targeted transfer schemes in the world. Using household survey data matched with published administrative data, the authors provide background on the patterns of inequality and poverty in rural China, describe the dibao program, estimate the program's impact on poverty, and carry out targeting analysis. The authors find that the program provides sufficient income to poor beneficiaries but does not substantially reduce the overall level of poverty, in part because the number of beneficiaries is small relative to the number of poor. Conventional targeting analysis reveals rather large inclusionary and exclusionary targeting errors; propensity score targeting analysis yields smaller but still large targeting errors. Simulations of possible reforms to the dibao program indicate that expanding coverage can potentially yield greater poverty reduction than increasing transfer amounts. In addition, replacing locally diverse dibao lines with a nationally uniform dibao threshold can in theory reduce poverty. The potential gains in poverty reduction, however, depend on the effectiveness of targeting.Publication Eligibility Thresholds for Minimum Living Guarantee Programs : International Practices and Implications for China(World Bank, Washington, DC, 2013-11)Using a simple framework, this paper discusses the underlying reason of the variation of threshold level in developed countries, from the least generous 20 percent to around 60 percent of median wage, with an average of 35 percent. The generosity of minimum guarantee social assistance programs is deeply rooted in social values and principles that further underpin the policy objectives. Many Organizations for Economic Cooperation and Development (OECD) countries set their policy targets for minimum living standard programs beyond basic needs and aim to guarantee a minimum socially acceptable level for a decent living. Thresholds are also refined to reflect the differences in family size and demographic structure, difference in regional cost of living and changes in prices and local wages. In some countries the thresholds show some regional variation due to local discretionary powers of sub-national authorities to set the threshold depending on the co-financing mechanisms. These lessons are valuable for China as the Chinese government has made efforts to standardize the implementation and management of its own minimum income guarantee (Di Bao) programs. The policy recommendations for China include accelerating the convergence of localized approaches, raising the administrative level for setting thresholds to higher level, defining the roles of central and local governments in financing and management, and establishing a transparent budgetary management system to transfer and allocate social assistance funds.Publication Evidence from a Randomized Evaluation of the Household Welfare Impacts of Conditional and Unconditional Cash Transfers Given to Mothers or Fathers(World Bank, Washington, DC, 2016-06)This study conducted a randomized control trial in rural Burkina Faso to estimate the impact of alternative cash transfer delivery mechanisms on education, health, and household welfare outcomes. The two-year pilot program randomly distributed cash transfers that were either conditional or unconditional and were given to either mothers or fathers. Conditionality was linked to older children enrolling in school and attending regularly and younger children receiving preventive health check-ups. Compared with the control group, cash transfers improve children's education and health and household socioeconomic conditions. For school enrollment and most child health outcomes, conditional cash transfers outperform unconditional cash transfers. Giving cash to mothers does not lead to significantly better child health or education outcomes, and there is evidence that money given to fathers improves young children's health, particularly during years of poor rainfall. Cash transfers to fathers also yield relatively more household investment in livestock, cash crops, and improved housing.Publication Conditional, Unconditional and Everything in Between : A Systematic Review of the Effects of Cash Transfer Programs on Schooling Outcomes(Taylor and Francis, 2014-03-06)Cash transfer programmes are a popular social protection tool in developing countries that aim, among other things, to improve education outcomes in developing countries. The debate over whether these programmes should include conditions has been at the forefront of recent policy discussions. This systematic review aims to complement the existing evidence on the effectiveness of these programmes in improving schooling outcomes and help inform the debate surrounding the design of cash transfer programmes. Using data from 75 reports that cover 35 different studies, the authors find that both conditional cash transfers (CCTs) and unconditional cash transfers (UCTs) improve the odds of being enrolled in and attending school compared to no cash transfer programme. The effect sizes for enrolment and attendance are always larger for CCTs compared to UCTs, but the difference is not statistically significant. When programmes are categorised as having no schooling conditions, having some conditions with minimal monitoring and enforcement and having explicit conditions that are monitored and enforced, a much clearer pattern emerges whereby programmes that are explicitly conditional, monitor compliance and penalise non-compliance have substantively larger effects (60% improvement in odds of enrolment). Unlike enrolment and attendance, the effectiveness of cash transfer programmes on improving test scores is small at best. More research is needed that examines longer-term outcomes such as test scores and, more generally, evaluating the impacts of UCTs.
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