Publication: Should Cash Transfers Be Confined to the Poor? Implications for Poverty and Inequality in Latin America
Loading...
Published
2011-11-01
ISSN
Date
2012-03-19
Author(s)
Editor(s)
Abstract
This paper compares for 13 Latin American countries the poverty and inequality impacts of cash transfer programs that are given to all children and the elderly (that is, "categorical" transfers), to programs of equal budget that are confined to the poor within each population group (that is, "poverty targeted" transfers). The analysis finds that both the incidence of poverty and the depth of the poverty gap are important factors affecting the relative effectiveness of categorical versus poverty targeted transfers. The comparison of transfers to children and the elderly also supports the view that choosing carefully categories of beneficiaries is almost as important as targeting the poor for achieving a high poverty and inequality impact. Overall, the findings suggest that although in the Latin American context poverty targeting tends to deliver higher poverty impacts, there are circumstances under which categorical targeting confined to geographical regions (sometimes called "geographic targeting") may be a valid option to consider. This is particularly the case in low-income countries with widespread pockets of poverty.
Link to Data Set
Citation
“Leite, Phillipe; Acosta, Pablo; Rigolini, Jamele. 2011. Should Cash Transfers Be Confined to the Poor? Implications for Poverty and Inequality in Latin America. Policy Research working paper ; no. WPS 5875. © World Bank. http://hdl.handle.net/10986/3642 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication South Africa’s Fragmented Cities: The Unequal Burden of Labor Market Frictions(Washington, DC: World Bank, 2026-01-08)Using high-resolution administrative, census, and satellite data, this paper shows that South African cities are characterized by spatial mismatches between where people live and where jobs are located, relative to 20 global peers. Areas within 5 kilometers of commercial centers have 9,300 fewer residents per square kilometer than expected, which is 60 percent below the global median. Poor, dense neighborhoods are most affected. In Johannesburg, a 10-percentile increase in distance from the nearest business hub corresponds to a 3.7-percentile drop in asset wealth (a proxy of household wellbeing) and 4.9-percentile drop in employment. In Cape Town, the declines are 4.0 and 3.7 percentiles, respectively. Employment is 87 percent lower in the poorest decile than the richest in Johannesburg and 61 percent lower in Cape Town. These findings suggest that South Africa’s spatial organization of people and economic activity constrains agglomeration and reinforces inequality. This methodology provides a scalable and standardized data-driven framework to analyze spatial accessibility and agglomeration frictions in complex, data-constrained urban systems.Publication The Evolution of Local Participatory Democracy in Nepal(Washington, DC: World Bank, 2025-11-05)Nepal is, according to its constitution, among the world’s most decentralized countries, with a long and complex tradition of local-level public participation. This paper traces the evolution of Nepal’s modern participatory institutions, examining the extent to which they are “induced” by external interventions versus being “organically” rooted in indigenous practices. The paper identifies three broad phases: an initial focus on participation in project implementation; a subsequent phase that expanded citizen engagement; and a third phase of citizen empowerment, culminating in the 2015 federal constitution, which granted unprecedented local autonomy. The analysis yields five key findings. First, over the past 50 years, successive reforms have progressively expanded opportunities for citizens to influence local decision-making. Second, these reforms have integrated traditional participatory mechanisms into formal institutions of local government. Third, although central-level initiatives exist, most participatory platforms continue to operate at the local level. Fourth, the federal constitution has created a new landscape of local democracy, embedding autonomy and accountability. Fifth, although they are still valued in many ethnic and territorial communities, traditional participatory practices are gradually disappearing. The paper concludes by offering policy recommendations to help donor agencies and governments strengthen Nepal’s democratic trajectory. It argues that effective interventions should build on Nepal’s deep participatory traditions while recognizing the constitutional reality of far-reaching local autonomy.Publication Institutional Capacity for Policy Implementation: An Analytical Framework(Washington, DC: World Bank, 2026-01-07)State capacity is an important prerequisite for policy implementation, yet at the country level it is difficult to measure, assess, and reform. This paper proposes a focus on institutional capacity: the ability of public institutions to implement the specific policy mandates for which they are responsible. Based on a review of existing literature, the paper defines the different dimensions that compose institutional capacity and groups them into two cross-cutting categories: organizational dimensions (personnel, financial resources, information systems, and management practices) and governance dimensions (transparency, independence, and accountability). The paper proposes measures for organizational and governance dimensions using existing data, shows intra-institutional variation of these measures within countries, and discusses how new data could be collected for better measurement of these concepts. Finally, the paper illustrates how the framework can be used to diagnose the sources of common problems related to weak policy implementation.Publication Closing the Gender Gap in Entrepreneurship: Overcoming Challenges in Law and Practice for Female Entrepreneurs(Washington, DC: World Bank, 2026-01-07)Despite significant strides toward gender equality, women around the world continue to encounter systemic obstacles that hinder their entrepreneurial success. This paper systematically reviews the literature on the barriers female entrepreneurs face and the solutions proposed to overcome these challenges. It discusses institutional factors, financial factors, human capital factors, and social and cultural factors. The literature overview is complemented by a series of stylized facts that illustrate how overcoming some of these existing barriers is correlated with improved women’s entrepreneurship and female labor force participation, drawing on the World Bank’s Women, Business and the Law database as well as the World Bank’s Enterprise Surveys. The findings underscore the need for creating an enabling environment where women can thrive as entrepreneurs.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Swaziland - Using Public Transfers to Reduce Extreme Poverty(Washington, DC, 2012-11)The report focuses on the social safety net, particularly cash and in-kind transfers. The safety net can play an important role in addressing poverty and vulnerability; however, the process by which the safety nets have been developed in Swaziland has produced a fragmented system that leaves many Swazis unprotected by the safety net. Improvements in efficiency and effectiveness are both necessary and possible. Poverty and extreme poverty in Swaziland are both overwhelmingly rural phenomena. The incidence of poverty is 73 percent in rural areas but only 31 percent in urban areas. Eighty-eight percent of the poor and 95 percent of the extreme poor live in rural areas, and the average consumption of the urban poor is 33 percent below the poverty line while it is 51 percent below the poverty line among the rural poor. Also, poverty is deeper in rural areas than it is in urban areas. The objective of this study is to identify viable ways to make the safety net more relevant and efficient through an in-depth analysis of poverty and vulnerability and of the efficacy of current safety net programs. The report focuses on publicly financed social transfers in Swaziland, including cash and in-kind transfers. This includes programs funded by either national or official international aid. Chapter two explores the risks faced by the Swazis, including but not limited to poverty. Chapter three reviews current social net programs and expenditures and analyzes the efficiency and effectiveness of social transfers. Chapter four analyzes ways to target safety net programs, and chapter five discusses options to increase the relevance and efficiency of the safety net, particularly in light of the recent financial crisis.Publication Swaziland : Using Public Transfers to Reduce Extreme Poverty(World Bank, Washington, DC, 2012-11)Swaziland has a number of social transfer programs, but these are not well coordinated and there is a need to better define the overall priorities of the overall safety net. Swaziland spends a significant amount on safety nets but there is room to increase the efficiency of spending by: (i) improving coordination between programs; (ii) making adjustments to program design and implementation; and (iii) removing some inefficient programs. Social transfers could play a larger role in reducing poverty but there are gaps in how well the safety net supports extremely poor households with children and/or unemployed household members. The assessment recommends that Swaziland should consider adopting a national child grant program and a public works program to fill these gaps.Publication Arab Republic of Egypt : Poverty Assessment Update, Volume 1. Main Report(Washington, DC, 2007-09-16)This report on the Poverty Assessment Update of Egypt is a contribution to the strategy of poverty alleviation pursued by the Government of Egypt. Using data from the two household surveys in 2000 and 2005, this report assesses the nature and dimensions of poverty in Egypt, and discusses the role of macroeconomic policies and labor markets in improving living standards. The report updates the findings of "Poverty Reduction in Egypt: Diagnosis and Strategy," published by the World Bank in 2002. Over the last two years Egypt has achieved remarkably high economic growth. Should this turnaround be sustained, there is hope that poverty can be dramatically reduced. Even though the report does not cover this most recent period, it is important to learn from the lessons of the recent past, and the report provides new information and insights that could be useful for policy-makers: 1) It identifies the overall scope and trends in poverty between 2000 and 2005, focusing on material aspects, but also assessing progress in non-income dimensions; 2) It isolates key correlates to poverty and economic vulnerability, providing detailed analysis of how inflation affected the poor in this period; 3) It links the labor market's developments with changes in living standards and poverty; and 4) It provides the analytical base for mapping poverty in Egypt, which can improve the targeting of social programs. The first chapter examines the evolution of living standards in Egypt during the period of analysis - 2000 to 2005. It also gives the details of the poverty map and where the poor live. Chapter 2 describes who the poor are and provides the poverty correlates: looking at the characteristics of the poor and the relation of these characteristics to education (and access to education), employment, gender, age, or asset characteristics. Chapter 3 continues by providing some background on economic developments between 2000 and 2005 and identifies possible areas of policy interventions in light of economic and social policies and developments after 2005. Chapter 4 offers in-depth analysis of the labor market to attempt to discern longer-term trends in living standards, and links employment with poverty levels. Finally, Chapter 5 looks at the capacity of the monitoring system, and lays the foundations for a future analytical program.Publication Tajikistan : Poverty Assessment(World Bank, 2009-12-03)Despite Tajikistan's sustained economic growth of the past few years and the country's notable achievements, poverty and low standards of living remain a pressing problem for the majority of Tajik people. Poverty reduction is therefore one of the priority goals of the Government of the Republic of Tajikistan, of its national and international partners, and of Tajik society as a whole. This report presents a comprehensive analysis of poverty in Tajikistan using the most recent Tajikistan Living Standards Survey (TLSS) data, which is for 2007. The report provides an in-depth analysis of poverty dynamics (since 2003); a poverty profile; the linkages between labor markets, migration, and poverty; the importance of social transfers for poverty alleviation; and the key issues in the health and education sectors. The report also simulates possible poverty impacts from the reduction in migration and remittances related to the global financial crisis. The report shows that migration and remittances are a significant factor in the observed improvements in living standards between 2003 and 2007. However, the expected reduction in migration and remittances due to the financial crisis is likely to result in increased poverty levels, vulnerability, and higher income inequality, at least in the short term.Publication 2011 Philippines Development Report : Generating Inclusive Growth to Uplift the Poor(World Bank, 2011-02-01)The theme of the 2011 Philippines development report is 'generating inclusive growth, uplifting the poor and vulnerable'. This theme is follows from the priorities set in President Aquino's Social Contract and the emerging 2011-2016 Philippines Development Plan (PDP). The PDP details the vision of inclusive growth and poverty reduction that underlies the social contract (chapter one). Accordingly, the PDP focuses on three strategic objectives: (1) attaining a sustained and high rate of economic growth that provides productive employment opportunities, (2) equalizing access to development opportunities for all Filipinos, and (3) implementing effective social safety nets to protect and enable those who do not have the capability to participate in the economic growth process. While the country's development agenda remains broadly the same over the last decade, the Aquino government is focusing on stepped-up implementation and delivery. The pressing development issues confronting the Philippines in 2011 are not radically different from those of previous years. The critical difference is the new government's focus on effective implementation and delivery of public goods and services, starting with a firm approach to fighting corruption and improving governance.
Users also downloaded
Showing related downloaded files
Publication Spearheading Vietnam’s Green Agricultural Transformation(Washington, DC, 2022)This report focuses on promoting low-carbon rice production systems in Vietnam. There are many sources of greenhouse gas (GHG) emissions within the agricultural sector in Vietnam, including along value chains and within the whole agri-food context. However, because rice production is so important to the country and to emission reductions in agriculture, this report focuses on known actions that can be rapidly upscaled, along with other complementary actions to reduce GHG emissions from rice production systems. The report covers emission reduction pathways in rice. This report assesses agronomic and other options that offer technically and economically feasible pathways to promote low-carbon rice. Some options have been piloted in Vietnam and require significant upscaling at the farm-level. This report considers challenges and practical actions and policy reforms to address these challenges for Vietnam’s low-carbon transition (LCT) in rice.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Islamic Law, Women's Rights, and State Law(Taylor and Francis, 2015-10-23)Issues related to Islamic law, women’s rights, and state law have long been and remain deeply contested. This is most evident in debates around family law reform in majority Muslim countries. As one recent example, in Mali, a secular state according to its Constitution, the National Assembly adopted in August 2009 a new family code proposed by the government. The new code included provisions to set the minimum age for marriage at 18; change inheritance rules for women including the ability for them to remain in their dwelling upon the death of their husband; change rules for adoption and the recognition of children born out of wedlock; define marriage as a secular and public act that should be ratified by the state; and protect the integrity of the human body (which relates among others to the issue of female genital cutting or FGC). In some countries arguments inspired by Islamic law have been used in order to suggest that prohibiting FGC and child marriage could be “un-Islamic,” and faith leaders have substantial influence on whether the practices persist or not. Mali is a case in point.Publication Fewer Questions, More Answers(World Bank, Washington, DC, 2022-12)The assignment of social programmes to their target population, known as targeting, is key to effective policy implementation. Proxy means testing is a widely used targeting approach where means testing is infeasible due to economic informality. This paper proposes a novel, practically feasible assessment approach that aims to reduce average proxy means test data collection costs, or allow more extensive data collection within a given resource envelope. Combining variable selection and prediction intervals, it develops a household-level truncated early stopping algorithm, which can reduce average interview length while maintaining predictive accuracy close to a standard proxy means test baseline. Applying the approach to Indonesian data, simulation of a 40 percent population coverage programme shows that targeting questionnaires could be shortened by 61 percent while maintaining PMT-level accuracy. A case study of a large health insurance programme in an urban area suggests that the share of intended beneficiaries who are among the targeted population can potentially be increased from 65.6 percent to 78.3 percent if enumerators conducted more of the shorter surveys that the truncated early stopping algorithm generates.Publication Taxes, Spending, and Equity: International Patterns and Lessons for Developing Countries(Washington, DC: World Bank, 2025-11-17)Taxes and public spending underpin the basic administration of government and finance the human capital and infrastructure investments needed for economic growth. They can also have a significant and immediate impact on poverty and inequality. The question of how public finance can support longer-term growth objectives while promoting equity has become even more important in recent years, given the high fiscal deficits and debt levels most countries emerged with in the aftermath of the COVID-19 pandemic. These included the increasing cost of debt and the need to restart environmentally sustainable growth while helping households address the learning losses and other social scars caused by the pandemic. This paper examines the global evidence on which households pay which taxes and who benefits from what spending, and critically, the net effect on different households across the income distribution. The aim is to identify the patterns and lessons that emerge for designing progressive fiscal policies. A global dataset of 96 countries is assembled, spanning all regions of the world and all national income levels, grounded in the Commitment to Equity (CEQ) approach to fiscal incidence.