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Targeted transfers in poor countries : revisiting the tradeoffs and policy options, Volume 1
 
Author:Ravallion, Martin; Collection Title:Policy, Research working paper series ; no. WPS 3048
Date Stored:2003/06/06Document Date:2003/05/31
Document Type:Policy Research Working PaperLanguage:English
Major Sector:(Historic)Sector not applicableReport Number:WPS3048
Sub Sectors:(Historic)Sector not applicableSubTopics:Environmental Economics & Policies; Rural Poverty Reduction; Inequality; Health Economics & Finance; Labor Policies; Services & Transfers to Poor; Poverty Impact Evaluation; Safety Nets and Transfers
Volume No:1  

Summary: Two tradeoffs have been widely seen to severely constrain the scope for attacking poverty using redistributive transfers in poor countries: an equity-efficiency tradeoff and an insurance-efficiency tradeoff. The author provides a critical overview of recent theoretical and empirical work that has called into question the extent of these tradeoffs in poor countries. He argues that these aggregate tradeoffs are often exaggerated. Indeed, they may not even be binding constraints in practice, given market failures. There appears to be scope for using carefully designed transfer schemes as an effective tool against both transient and chronic poverty. However, the same factors that weaken the tradeoffs also suggest that efficient redistributive policies might look rather different to the programs often found in practice.

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