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Nanak Kakwani and Hyun H. Son International Poverty Centre Brasilia, Brazil

On Assessing Pro-Poorness of Governments Programs: International Comparisons. Nanak Kakwani and Hyun H. Son International Poverty Centre Brasilia, Brazil. Different kinds of government programs. Cash programs: - Principle component of safety net in industrialized market economies

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Nanak Kakwani and Hyun H. Son International Poverty Centre Brasilia, Brazil

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  1. On Assessing Pro-Poorness of Governments Programs: International Comparisons Nanak Kakwani and Hyun H. Son International Poverty Centre Brasilia, Brazil

  2. Different kinds of government programs Cash programs: - Principle component of safety net in industrialized market economies - Social insurance programs (e.g. publicly supported social pensions, unemployment insurance/allowance programs) - Social assistance programs (e.g. pensions to support disabled, orphans, widows, & other vulnerable groups, conditional cash transfers) In-kind programs: - Commodity subsidy schemes - Food stamps/vouchers - Public works programs (e.g. employment guarantee programs in India) Government services in education, health, & infrastructure

  3. What is pro-poor policy? • A government policy can be said to be pro-poor if it benefits the poor more than the non-poor. • It means that with a fixed cost to the government, a pro-poor policy should achieve greater poverty reduction compared to a counter-factual situation when everyone receives exactly the same benefit from the policy. • Policy A will be more pro-poor than policy B if for a given cost, policy A leads to a greater poverty reduction than policy B. .

  4. Additive and decomposable class of poverty measures : Headcount ratio : Poverty gap : Severity of poverty

  5. Pro-Poor Policy (PPP) Index • b(x): benefits received by an individual with income x : % change in total poverty due to b(x) = mean benefit per person • % change in total poverty due to a universal targeting of = where is the percentage change in poverty if everyone receives one unit of currency (i.e. absolute elasticity)

  6. Pro-poor Policy Index Example: (i) = 1.20 : a programme reduces poverty 20% more compared to a counterfactual universal targeting (ii) = 0.70 : a programme reduces poverty 30% less compared to a universal targeting

  7. Setting a Benchmark for PPP index • Imperfect targeting: worst scenario • Perfect targeting: best scenario * Note: for incentives, k should be always < 1

  8. PPP index under perfect targeting • Single poverty line • - poverty gap ratio: 1/H • - severity of poverty: where g = poverty gap ratio s = severity of poverty index • . Needs adjusted poverty lines

  9. PPP index by socioeconomic groups • Within group PPP index • Total group PPP index The pro-poor policy index for the whole country is the weighted average of the total-group PPP indices for the individual groups, with weight proportional to shares of benefits received by each group.

  10. Welfare programs : Thailand 2000

  11. Welfare programs: Thailand 2000

  12. Russian welfare system

  13. PPP index for Russian welfare system

  14. PPP index for education : Vietnam 1997-98 Universal Education

  15. Targeting children in Africa

  16. Food subsidies in Africa

  17. Food subsidies targeted at the poor

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