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Angus Deaton and Christina H. Paxson. 1991 "Patterns of Aging in Thailand and Côte d'Ivoire." Living Standards Measurement Study, Working Paper No. 81, World Bank, Washington, D.C.
This paper is broadly concerned with the living standards of older people in tow contrasting developing countries, Côte d'Ivoire and Thailand. We use a series of household surveys from these two countries to present evidence on factors affecting the living standards of the elderly: living arrangements, labor force participation, illness, urbanization, income and consumption. One of the issues we examine is whether life-cycle patterns of income and consumption can be detected in the data. The fact that few of the elderly live alone makes it difficult to accurately measure the welfare levels of the elderly, or to make statements about the life-cycle patterns of income and consumption of individuals. We find that labor force participation and individual income patters follow the standard life-cycle hump shapes in both countries, but the average living standards within households are quite flat over the life-cycle. The data presented suggest that changes in family composition and living arrangements of the elderly are likely to be more important sources of old-age insurance than asset accumulation.
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Martin Ravallion. 1991 "Does Undernutrition Respond to Incomes and Prices? Dominance Tests for Indonesia." Living Standards Measurement Study, Working Paper No. 82, World Bank, Washington, D.C.
Recent evidence suggests taht food energy intakes are less responsive to income of the poor than was once thought. However, it is not intakes per se taht we are concerned about, but undernutrition. Two facts have long confounded assessments of impacts on undernutrition: individual nutrient requirements vary in a generally unobserved way, and intakes are observed with error. By modelling oberved intake distributions econometrically, straightforward stochastic dominance tests can permit robust qualitative inferences. An application to Indonesia in the mid 1980s indicates that regional differences in energy intake distributions are influenced by average income levels, intra-regional inequalities, and local prices of staple foodgrains, all with unambiguous effects on undernutrition. The results suggest that any adverse effects on inequality of a growth process would need to be large to outweigh the desirable effect on undernutrition. Plausible effects on rural incomes are insufficient to outweight adverse effects on undernutrition of higher rice prices.
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Martin Ravallion and Gaurav Datt. 1991 "Growth and Redistribution Components of Changes in Poverty Measures, A Decomposition with Applications to Brazil and India in the 1980s." Living Standards Measurement Study, Working Paper No. 83, World Bank, Washington, D.C.
We show how changes in poverty measures can be decomposed into growth and redistribution components, and we use the methodology to study poverty in Brazil and India during the 1980s. Redistribution alleviated poverty in India, though growth was quantitatively more important. Improved distribution countervailed the adverse effect of monsoon failure in the late 1980s on rural poverty. However, worsening distribution in Brazil, associated with the macroeconomic shocks of the 1980s, mitigated poverty alleviation through the limited growth that occurred. India's higher poverty level than Brazil is accountable to India's lower mean consumption; Brazil's worse distribution mitigates the cross-country difference in poverty.
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Wim P. Vijverberg. 1991 "Measuring Income from Family Enterprises with Household Surveys." Living Standards Measurement Study, Working Paper No. 84, World Bank, Washington, D.C.
The accuracy of the measured income of family enterprises is a matter of importance in studies of, interalia, human capital, income distribution and consumption behavior. One may measure this income as part a household survey or through an enterprise survey. Household surveys have advantages over enterprise surveys in studying the income of the self-employed. They capture more the truly small-scale one-person enterprises, and there is a wealth of information that can be utilized in the study of enterprise income, such as education of other family members, migration history, and possible employment history. Household surveys also allow one to study the role of family enterprises within the context of the household, in relation to labor supply, risk sharing, enterprise start-up, and asset formation. Thus, household surveys offer a better perspective for study of living standards and poverty. By comparison, enterprise surveys are able to extract more detailed information about the enterprises than household surveys can. Interviews of households spend considerable time in gathering information that, for studying enterprises, has no value. Enterprise surveys fully focus on production. Measures of inputs and outputs are the primary objective of the survey, and considerable effort goes into obtaining good measures of these. This paper examines the three enterprise income values that one may drive from the survey moduels of the Living Standards Surveys as held in the Côte d'Ivoire and Ghana, which are household surveys. The three values appear to be fairly imprecise and do not correlate all that well. This conclusion is rather sobering, and it implies that relying on self-reported values of sales revenue, expenditures and enterprise earnings is risky. The questions of the surveys could be improved. However, the primary change in the methodology of the survey should be an attempt to measure the transactions of enterprises more carefully. Using worksheets and cross-checking responses in loco should help, but since many enterprises do not use any accounting system, it may be necessary to monitor inflows and outflows either personally or with diaries.
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Angus Deaton and Franque Grimard. 1992 "Demand Analysis and Tax Reform in Pakistan." Living Standards Measurement Study, Working Paper No. 85, World Bank, Washington, D.C.
Pakistan, like many LDCs, derives most of government revenue from indirect taxation. However, the system of taxes and subsidies has grown up piecemeal over the years, and it unlikely that it cannot be improved. Any tax reform proposal must deal with the basic issues of equity and efficiency. Changes in taxes benefit or hurt people according to their demand and supply patters, while the effects on government revenue depend on the way in which supply and demand respond to prices. Empirical demand analysis can inform the debate by delineating consumption pattersn, and by estimating the responsiveness of demand to price. Previous exercises in price reform for Pakistan have been forced to make very restrictive assumptions about consumer preferences, and have typically used demand systems that prejudge what are the desirable directions of price reform. In this paper, the mothodology of Deaton (1988, 1991) is extended and applied to the 1984-85 household Income and Expenditure Survey. A theory of quality variation based on separable preferences is developed, and the implications for welfare and empirical analysis laid out. The prices of oils and fata and of sugar do not vary very much in the survey data, and the symmetry and homogeneity restrictions from the theory play an important part in obtaining sharp estimates of own and cross-price elasticities. The parameter estimates suggest that there are significant cross-price elasticities between the high-calorie foods, wheat, rice, sugar, and oils, and the presence of these substitution patters means that the effects of potential price reforms are quite different from those that would be estimated using the traditional and more restrictive assumptions. Based on demand patterns alone, ti would be desirable to raise government revenue by raising the consumer price of rice. However, in Pakistan it is not generally possible to decouple the producer and consumer prices of rice, so that a full analysis of policy change would also depend on the supply responses, which are not considered in this study.
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Paul Glewwe and Gillette Hall. 1992 "Poverty and Inequality during Unorthodox Adjustment, The Case of Peru, 1985-90." Living Standards Measurement Study, Working Paper No. 86, World Bank, Washington, D.C.
This paper examines the change in poverty and inequality in Lima, Peru between 1985-86 and 1990. The data employed are from the 1985-86 and 1990 Living Standards Measurement Surveys. The results are presented in the context of the "unorthodox" macroeconomic policies which were undertaken between those years by the Peruvian government. However, no attempt is made to link specific macroeconomic policies to welfare outcomes. The paper presents a descriptive account of poverty and living conditions in Lima, and discusses some of the implications of the findings for social investment programs. The major findings are: 1. Between 1985-86 and 1990 the average household in Lima experienced a decline in per capita consumption of 55 percent. 2. Poverty, defined as the inability to cover the household's basic nutritional requirements, increased from 0.5% of the population in 1985-86 to 17.3% in 1990. 3. The poorest 20% of the population, especially the poorest 10%, suffered the most, experiencing declines in consumption of more than 60 percent. 4. Households headed by individuals with little or no education experienced greater declines in consumption than the better educated. Longer run social investment plans should prioritize education. 5. The rate of unemployment increased significantly, and by 1990 had become a distinct characteristic of the poor. Programs designed to increase low-wage employment opportunities would be self-targeted to the poorest households. 6. The provision of public services, particularly potable water and sewage services, deteriorated most significantly in the poorest areas of the city, among those who also suffered the greatest declines in per capita consumption. Public investment in public water and sanitation services is recommended in these areas. 7. Households headed by women are not found to have suffered greater declines in per capita consumption than male headed households. 8. Recently settled "pueblos jovenes" are not disproportionately populated by poor families. The poorest families are well-distributed throughout the three poorest regions of the city.
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John L. Newman and Paul J. Gertler. 1992 "Family Productivity, Labor Supply, and Welfare in a Low-Income Country." Living Standards Measurement Study, Working Paper No. 87, World Bank, Washington, D.C.
This paper develops an analytical approach to estimate family labor supply and consumption decisions appropriate for developing countries. The approach allows for an arbitrary number of family members, each of whom may or may not engage in multiple activities. We identify the marginal returns to work in self-employment without directly observing the marginal returns or estimating the enterprise's production function. The key feature of the approach is to work with underlying structural marginal return and marginal rate of substitution functions together with first order Kuhn-Tucker conditions. We use this model to analyze family consumption and labor supply decisions of rural landholding households in Peru. We estimate coefficients of the marginal rate of substitution of family consumption for individual family member's leisure and marginal returns to two activities - wage work and self-employed agriculture. Using the estimated coefficients of the structural model together with the budget constraint, we simulate the effects of increasing returns to wage work and self-employed agriculture on family consumption and hours of work in the two activities. Estimating the structural parameters of the marginal rate of substitution allows us to convert leisure to consumption units and to calculate the compensating and equivalent variation of the changes in returns. The results indicate that roughly 10 percent of teh change in welfare following a pure income transfer is accounted for by increases in leisure enjoyed by different family members. A 20 percent increase in wage offers of prime-age males has roughly 2.3 times the effect on family consumption than a similar 20 percent increase in wage offers of prime-age females, conditional on there being an effect on the household at all. In order for there to be an effect, at least one individual must either already be working in the wage sector or be induced to work in the sector as a result of teh change. On the other hand, a 20 percent increase in the marginal returns to farm work of prime-age females and males has roughly the same effect on family consumption. Taking into account the value of changes in leisure, the change in family welfare due to a change in female returns is higher. This suggests that if the cost of achieving the gains in productivity are comparable, then policies designed to enhance female productivity on the farm would be an effective means of raising family welfare.
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Martin Ravallion. 1992 "Poverty Comparisons, A Guide to Concepts and Methods." Living Standards Measurement Study, Working Paper No. 88, World Bank, Washington, D.C.
Poverty assessments are typically clouded in conceptual and methodological uncertainties. How should living standard be assessed? In a household survey necessary, and is it a reliable guide? Where should the poverty line be drawn, and does the choice matter? What poverty measure should be used in aggregating data on individual living standards? Does that choice matter? This paper surveys the issues that need to be considered in answering these questions, and discusses a number of new tools of analysis which can greatly facilitate poverty comparisons, recognizing the uncertainties involved. Various applications in poverty assessment and policy evaluation for developing countries are used to show how these methods can be put into practice. Recommendations are made for future applied work.
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Duncan Thomas, Victor Lavy and John Strauss. 1992 "Public Policy and Anthropometric Outcomes in Côte d'Ivoire." Living Standards Measurement Study, Working Paper No. 89, World Bank, Washington, D.C.
Using data from Côte d'Ivoire, we examine the impact of public policies on three anthropometric outcomes: height for age and weight for height of children as well as body mass index of adults. During the eighties, low growth rates Côte d'Ivoire were accompanied by an economic adjustment program which included substantial cuts in public spending together with increases in the relative price of foods. If reductions in social spending resulted in lower availability and quality of health care services, then our results suggest that child health (aprticularly height for age) will have been adversely affected. The provision of basic services (such as immunizations) and ensuring facilities are equipped with simple materials (such as having basic drugs in stock) will yield high social returns in terms of improved child health. Food prices have tended to rise in Côte d'Ivoire during the eighties and we find that higher food prices have had a significantly detrimental impact on the health of Ivoiran children (as measured by weight for height) and adults (as indicated by lower body mass indices). In contrast, the effects of income on health are significantly but quite small, except in the case of adult women.
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Martha Ainsworth, Godhke Koda, George Lwihula, Phare Mujinja, Mead Over and Innocent Semali. 1992 "Measuring the Impact of Fatal Adult Illness in Sub-Saharan Africa, An Annotated Household Questionnaire." Living Standards Measurement Study, Working Paper No. 90, World Bank, Washington, D.C.
This paper describes the development and content of a household questionnaire designed to measure the economic impact of adult morbidity and mortality in an African country. The questionnaire is the main data collection instrument of the research project on "The Economic Impact of Fatal Adult Illness due to AIDS and Other Causes in Sub-Saharan Africa," conducted by a research team from the World Bank and the University of Dar es Salaam. The main objectives of the project are: (1) to measure the impact of fatal adult illness on individuals, households and communities; and (2) to estimate the costs and effects of alternative policies to assist the survivors. The household questionnaire was adapted from the questionnaire of the World Bank's Living Standards Measurement (LSMS) to measure the well-being and coping behaviors of individuals and households in response to fatal illness among adults. Key innovations in the household questionnaire include: adaptation for a longitudinal research design, includng "inter-wave" consistency checks; an expanded set of questions on acute and chronic illness and their costs; a module on the mortality of household members and relatives; a consumption module that allows for seasonality; and collection of more data at the individual level, to facilitate analysis of intra-household distribution of resources.
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Paul Glewwe and Hannan Jacoby. 1992 "Estimating the Determinants of Cognitive Achievement in Low-Income Countries, The Case of Ghana." Living Standards Measurement Study, Working Paper No. 91, World Bank, Washington, D.C.
The objective of this paper is to assess the determinants of student achievement in middle schools in Ghana, with special attention given to school characteristics. We present a model of human capital accumulation which includes decisions on how long to attend school, which school to attend, and how much human capital to accumulate. This provides a framework for controlling for selectivity into middle schools, which is often ignored in the human capital production function literature. We also explicitly account for the fact that many children attend school only sporadically, which reduces their cognitive achievement but, according to our model, is a rational response among credit constrained households. We then estimate, for the cohort of children aged 12 to 18, the probability that they are in the middle school, their choice of which middle school to attend, and the determinants of achievement in reading and mathematics skills in Ghana's middle schools. In addition to specific findings regarding which school characteristics contribute to such achievement, we find some evidence indicating that households in Ghana suffer from credit constraints and fairly strong evidence that sample selectivity is taking place and hence may distort estimate that do not account for it.
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Martha Ainsworth. 1992 "Economic Aspects of Child Fostering in Côte d'Ivoire." Living Standards Measurement Study, Working Paper No. 92, World Bank, Washington, D.C.
Throughout West Africa, it is a common and socially accepted practice for parents to send their children to live with other households. Several economic motives have been suggested for these "fostering" arrangements: the demand for child labor; investments in human capital; child care; and income insurance. Child fostering, like fertility, is a measure of the demand for children. Evidence of economic factors underlying fostering decisions would demonstrate taht the demand for children in Africa is potentially susceptible to policy intervention. This paper examines the economic determinants of child fostering decisions in Côte d'Ivoire, where, 1985, one fifth of non-orphaned children age 7-14 were living away from both natural parents. The economic determinants of both sending and receiving decisions are examined separately and evaluated with respect to their support for child labor and human capital explanations. The determinants for both sides of the fostering market are then estimated simultaneously, using a model of friction developed by Rosett (1959), so that the symmetry of fostering determinants can be formally tested. The results indicate that important economic factors affect fostering decisions on both sides of the fostering market; however, different factors explain sending and receiving decisions. The economic determinants also vary by the sex of the child and whether the household is in an urban and rural area. The findings are consistent with a child labor explanation and inconclusive respect to schooling investments as a motive. Although the number of children fostered out increases with family size, the paper finds no evidence that children are fostered out because parents cannot afford them. The symmetry of fostering decisions could not be rejected; nevertheless, in all regressions the significant determinants of the sending and receiving decisions are different.
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Victor Lavy. 1992 "Investment in Human Capital, Schooling Supply Constraints in Rural Ghana." Living Standards Measurement Study, Working Paper No. 93, World Bank, Washington, D.C.
Human capital investment is usually modeled in an intertemporal optimization framework in which households or individuals maximize the present value of life-time utility. The main cost emphasized in these models is forgone earnings while in school. Direct costs such as user fees and travel costs are given much less attention. In many developing countries, however, direct costs such as travel expenses can be an important component in household educational decisions. If the direct cost of enrollment in middle or secondary schools is much higher than for primary schools, the households reduce investment in primary education. The paper introduces into the Ben-Porath/Heckman model a convex cost function of schooling, and analyzes the implications for school attendance and attainment. The empirical work confirms the prediction of the theoretical model: the cost of advanced levels of education influences primary schooling decisions. This finding is relevant for current policy debates concerning the financing of educational systems in developing countries.
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Victor Lavy and John M. Quienley. 1993 "Willingness to Pay for the Quality and Intensity of Medical Care, Low-Income Households in Ghana." Living Standards Measurement Study, Working Paper No. 94, World Bank, Washington, D.C.
Important choices about the organization of health care systems and the role of government in the provision of health care depend crucially upon citizen demand for health services as well as the efficacy of those services in promoting the well-being of citizens. In the context of developing countries, where available public resources are so scare, credible estimates of the private value of subsidized treatment are needed to establish priorities for public budgeting. Knowledge of household demands for service is also important to set public prices for government provided medical services -- to balance out, or at least to recognize, the objectives of cost recovery and those of broad availability. Finally, elements affecting use, like cost and accessibility, are of practical importance in facility design and location. This paper estimates the elements affecting the choice among different kinds and intensities of medical treatment in response to illness or injury. We also estimate households' willingness to pay for medical care. In the empirical analysis, particular attention is paid to three important theoretical and measurement issues: (1) The decision to seek treatment and the intensity of treatment sought is responsive to an ex ex ante evaluation of the seriousness of the illness or injury, not to some outcome of the treatment measured ex post. (2) The decision to seek treatment includes qualitative and quantitative dimensions and includes joint or sequential decisions about the type of treatment and the intensity that treatment is used. (3) The cost of medical services is borne by consumers in highly complex ways, depending upon the facility chosen, the number of consultations or treatments sought, the seriousness of the illness or injuly, and government policy for subsidy or insurance. The data used for this analysis are well suited to address the difficulty of drawing inferences about these complex measurement issues in consumer choices. The analysis is conducted using cross sectional data on the behavior of Ghanaian households -- typically low income households -- in response to illness or injury. The empirical analysis is based upon the choices of 5,000 individuals in 1987.
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T. Paul Schultz and Aysit Tansel. 1993 "Measurement of Returns to Adult Health, Morbidity Effects on Wage Rates in Côte d'Ivoire and Ghana." Living Standards Measurement Study, Working Paper No. 95, World Bank, Washington, D.C.
Sickness should make individuals less productive by reducing their capacity to do work. Measurement of this effect of morbidity on productivity involves several measurement problems. First, there is no consensus on how to measure adult morbidity in a household survey of a low-income population. Second, if part of earnings is used to improve health, how is the impact of morbidity on productivity inferred? To consider the first problem, surveys from Côte d'Ivoire and Ghana are examined to assess whether self-reported functional activity limitation due to illness is a reasonable indicator of morbidity for wage earners. In both countries this form of illness is a reasonable indicator of morbidity for wage earners. In both countries this form of morbidity is about in the last four weeks and varies in a plausible manner. To deal with both the measurement and joint determination problems, an instrumental variable estimation approach using local food prices and public services is implemented for assessing how morbidity impacts on wages and earnings. These estimates indicate that morbidity is linked among men to declines in hourly wage rates, and associated with reduced hours of work for wages, and a reduced probability of entering the wage labor force. Among much smaller samples of wage earning women, the patterns between morbidity and wage rates and time allocation are not uniform or statistically significant.
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Frederic Louat, Margaret E. Grosh and Jacques van der Gaag. 1993 "Welfare Implications of Female Headship in Jamaican Households." Living Standards Measurement Study, Working Paper No. 96, World Bank, Washington, D.C.
In this paper we first compare the economic status of male- and female-headed households. We then analyze differences in the use of resources (time and money) between the two groups. Finally, we focus on the relative well-being of the children in these households. Our findings show that poverty and female headship are weakly linked. For instance, if we draw a poverty line that labels 10% of the Jamaican population as poor, 9.0 percent of people living in male-headed households are poor versus 11.1 percent of people living in female-headed households. This result is based on per capita consumption as the welfare indicator. If other indicators are used, or poverty measures other than the head count index, the differences become even smaller. If the main cause of concern for female-headed households is the expectation that female headship is highly correlated with poverty, then this concern can be put to rest. The study finds some evidence of small differences in resources use between the two types of households. Labor force participation data indicate that female heads are more likely to work in the market place than women with similar characteristics who are the spouses of male heads of households. Again, the differences are small: on average 64.5 percent versus 57.9 percent. The analyses of household expenditures shows that female-headed households spend no more on food than do male headed households. However, when looking at more detailed food expenditures, the differences are more pronounced. For instance, female headships appear to be associated with spending on higher quality food items such as meat, vegetables, milk and otehr diary products. Perhaps the most important question answered in this paper is to what extent female headship influences child welfare. The results show that children in female-headed households have, by a large, equal access to social services and equally good welfare outcomes as children in male-headed households.
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Harold Coulombe and Lionel Demery. 1993 "Household size in Côte d'Ivoire, Sampling Bias in the CILSS." Living Standards Measurement Study, Working Paper No. 97, World Bank, Washington, D.C.
The paper takes as its starting point the decline in household size as measured in the Côte d'Ivoire. Living Standards Survey (CILSS) over the period 1985 to 1988. This decline, from 8.31 to just 6.32, cannot be explained in terms of real-world changes alone, and so must be due also to either sampling bias or non-sampling errors. The paper identifies a change in sampling procedures as the most likely cause of the problem. The over-enumeration of large households in the early years of the survey is also reflected in dwelling size changes. However, observed declines in household size measured within the same sampling arrangements, and even within the same panel of households, suggest that there is also a real-world decline in household size in Côte d'Ivoire. The paper concluses that care must be taken in over-time and cross-section analyses with the CILSS data, and an appropriate re-weighing of the data is called for.
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Paul Glewwe and Hanan Jacoby. 1993 "Delayed Primary School Enrollment and Childhood Malnutrition in Ghana, An Economic Analysis." Living Standards Measurement Study, Working Paper No. 98, World Bank, Washington, D.C.
This paper investigates why children in low income countreis often delay primary school enrollment, despite the prediction of human capital theory that schooling will begin at the earliest possible age. We explore a number of explanations for delayed enrollment, but focus on the hypothesis that delays are rational responses to early childhood malnutrition. We test these alternative hypotheses using recent data from Ghana. Our estimates, which address a number of previously ignored econometric issues, strongly support the notion that childhood malnutrition causes delayed enrollment. We find no support for alternative explanations based on borrowing constraints and the rationing of places in school.
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Judy L. Baker and Margaret E. Grosh. 1993 "Measuring the Effects of Geographic Targeting on Poverty Reduction." Living Standards Measurement Study, Working Paper No. 99, World Bank, Washington, D.C.
Targeting benefits to the poor by geographic location is very popular due to its simplicity. Regions can be assigned priority on the basis of existing aggregate data. Programs to improve or extend infrastructure, social services, or transfer benefits can then operate in those identified regions. this paper presents some of the technical issues faced by planners in designing geographically targeted programs, and what approximate impact they will have on reducing poverty. Simulated transfer schemes using household data for Venezuela, Mexico and Jamaica indicate that geographic targeting is a useful mechanism for transfering benefits to the poor. Poverty can be significantly reduced when compared with transfer schemes involving no targeting. Of the various techniques used to identify priority regions for a targeted program, outcomes proved to be fairly similar. The level of geographic unit does, however, seem to have a notable impact on targeting outcomes. Poverty can be significantly reduced when targeting smaller geographic region, the greater is the reduction in poverty. This has obvious implications for program design. Outcomes comparing a general food subsidy scheme, a food stamp program which uses a means test and a self-selection process, and geographic targeting show clearly that the targeted schemes perform better than the untargeted price subsidies. Between the two targeting mechanisms, the results are inconclusive. Identifying the poor individuals based on where they live rather than their income level (which is difficult to verify), or nutritional status is undoubtedly easier to carry out. There are in practice, however, problems of incentive effects and political economy which may arise with geographic targeting that should be considered.
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Gaurav Datt and Martin Ravallion. 1994 "Income Gains for the Poor from Public Works Employment, Evidence from Two Indian Villages." Living Standards Measurement Study, Working Paper No. 100, World Bank, Washington, D.C.
Current knowledge provides little guidance on one of the key issues in evaluating workfare schemes: What are the net income gains to participate? This paper offers an answer for rural public employment in the state of Maharashtra in India. An economic model of intra-household time allocation is proposed, and the paper offers a consistent estimator, recognizing that the model entails that both regressands and endogenous regressors will be censored. The empirical implementation indicates that workfare projects induce significant behavioral responses, though the predominant time displacement is such that the net income gains remain large. Employment on the projects led to a reduction in poverty, of almost the same magnitude as a uniform and undistorting allocation of the same gross budget.
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