Cash Transfers & Conditional Cash Transfers (UCTs & CCTs) Kathy Lindert Social Safety Nets Core Course December 7, 2011 1
Outline What, Why, and When to Use Cash? Types of cash transfer programs (with extra on CCTs) Design & Implementation Summary: Pros and Cons Extra slides on CCT impacts Extra slides on UCTs 2
What are Cash Transfers? Cash transfer programs provide cash or nearcash assistance to the poor and certain vulnerable groups who will fall into poverty in the absence of the transfer. Objectives: Increase the incomes of the poor; Help individuals and families cope with the consequences of economic and other shocks; facilitate government reforms 3
Why Cash? 1. Cost Effective. Can be cheaper vehicle to deliver benefits than in-kind benefits (e.g., food) 2. Consumer choice. Because cash doesn t distort consumer preferences or presume to know what the individual families need. 4
When is Cash Appropriate? Situations of Chronic poverty: To reduce current (income or consumption) poverty When the demand for health, nutrition and education services is insufficient (or the returns from child labor too high) for parents to improve children s human resource development Situations of Shocks: During emergencies when there is an adequate food supply When transitory shocks (or reforms) trigger large welfare losses among the vulnerable (e.g., global crisis, energy tariff reforms) Automatic stabilizers? (recent evidence from ECA ) Circumstances for delivery of benefits: When poor or vulnerable groups can (potentially) access financial facilities (permanent or mobile) When food is too costly to transport, and is locally available. 5
When are cash transfers an inappropriate part of a safety net? Shallow financial markets (hard to move cash) When administrative targeting is not possible, hence self-targeting is the only option (no inferior cash) When supply of essential goods and services has been disrupted (wars, natural disasters) When programs aim explicitly to modify recipient consumption behavior (e.g. cash rarely given to substance abuse victims) When safety net is funded with in-kind contributions (e.g. food aid recipient countries) 6
Outline What, Why, and When to Use Cash? Types of cash transfer programs (with extra on CCTs) Design & Implementation Summary: Pros and Cons Extra slides on CCT impacts Extra slides on UCTs
Types of Cash Transfer Programs 1. Poverty-targeted / Last-Resort Programs (UCTs or CCTs) 2. Categorical: a. Social pensions: noncontributory transfers to the elderly b. Disability assistance c. Family & Child Allowances 3. Near-Cash Benefits: Food stamps and other voucher programs 8
1. Poverty-Targeted, Last-Resort Social Assistance ( Needs-Based ) Targeted to the poor Usually through means-testing or proxy means-testing Income threshold: may be linked to average or minimum statutory wages, or minimum cost of living Benefits: Financed by general revenues Benefits can either be flat, or vary depending on household situation Benefit levels generally low Common in OECD, Middle-Income countries in LAC, ECA, and increasing use in some Lower-Income Countries (Asia, Africa, LAC, ECA). Some examples: Guaranteed Minimum Income (GMI) & Minimum Subsistence Programs Conditional Cash Transfers (CCTs) 9
Guaranteed Minimum Income (GMIs) Objectives: Guarantee a minimum income for poor households below an income threshold Benefit levels: Generally equal to the difference between monthly household income and the threshold, but vary according to household size Coverage: A safety net for the poorest, aims to cover the bottom 5-10% of the population. In practice, most cover less than 5% Targeting: Usually based on income and asset testing by social workers through social welfare offices Complementary to other social protection (pensions, unemployment benefits, family allowances) EXAMPLES: Most OECD countries Most ECA countries (EU new member states, Caucuses, Balkans) Some LICs: (e.g., Kyrgyz Republic, Moldova) China (Dibao program) 10
GMI Programs: Simplified Illustration of Benefits Calculations Actual pre-transfer income Minimum Subsistence Level of Income Benefits vary by distance to minimum subsistence level 11
ECA Examples: Targeting Accuracy of LRSA (GMI) Programs 70 ECA: Targeting Accuracy of Social Assistance Programs 70 ECA: Targeting Accuracy of Social Assistance Programs 60 50 40 30 AVERAGE LRSA (Nobs=19) AVERAGE CA MT (Nobs=8) 60 50 40 30 AVERAGE SCHOLARS HIP (Nobs=15) AVERAGE UTILITY (Nobs=10) 20 10 0 Q1 Q2 Q3 Q4 Q5 AVERAGE CA NON-MT (Nobs=14) 20 10 0 Q1 Q2 Q3 Q4 Q5 AVERAGE WAR VETERANS (Nobs=4) Source: World Bank estimates using latest household survey data: Sundaram et. al. (forthcoming 2010) LRSA = last resort social assistance (GMI and minimum subsistence programs) CA = child allowances (Means Tested and Non-Means-Tested) 12
Conditional Cash Transfers Dual objectives: Pay a cash benefits to alleviate poverty and inequality in the short run That is conditional on household investments in education (e.g., school attendance) and health (e.g., growth monitoring) to break the intergenerational cycle of poverty in the longrun Targeting: usually means-tested or proxy means-tested, often in combination with geographic targeting Benefit levels and coverage vary EXAMPLES: Most countries in LAC Several countries in East Asia & South Asia Several countries in Africa Several countries in ECA Several OECD countries 13
CCT emerging around the world Conditional cash transfer (CCT) programs have become very popular: first in Latin America and now across the world 1997 2010
Program size/target Various Approaches: Scale and Human Capital Linkages Nationwide Niche (regional or narrow target population) Small scale/pilot Conditions Education and Health Education Only Bolsa Familia (Brazil) Oportunidades (Mexico) Bono de Desarrollo Humano (Ecuador) Bolsa Escola (Brazil) Familias en Acción (Colombia) Jaring Pengamanan Sosial (Indonesia) Program of Advancement through Health and Education (Jamaica) Female Secondary School Assistance Program (Bangladesh) Japan Fund for Poverty Reduction Girls Scholarship Chile Solidario Program (Cambodia) Social Risk Management Project (Turkey) Education Sector Support Project (Cambodia) Programa de Asignación Familiar (Honduras) Cash Transfer for Orphans and Vulnerable Children (Kenya) Atención a Crisis (Nicaragua) Red de Protección Social (Nicaragua) Basic Education Development Project (Yemen) Subsidio Condicionado a la Asistencia Escolar - Bogota (Colombia) Punjab Education Sector Reform Program (Pakistan) Lots of variation in practice: Definition of conditionalities Implementation of consequences ( hard penalties vs softer approach )
CCTs: Many ways to structure benefits menu + conditionalities Example: CCT with Education Conditionalities Option 1: Equal payments within and across years Option 2: Higher payments at beginning & end of school year Option 4: Bonus upon graduation Option 3: Higher payments across years (grades/classes) Other options: Vary benefits by household size and composition Vary benefits by poverty level Adaptations for health conditionalities
Why introduce conditions? Human Capital Reasons: Households sometimes invest inefficiently little in child human capital Persistently underestimate returns to human capital Externalities to education and health investments Incomplete altruism between parents and children Proven Impacts (subsequent slides) Political economy justifications: Conditions increase political support to transfer programs Emphasis on co-responsibilities rather than conditions
Political Role of Conditionalities (Brazil Media study) Press debate suggests that conditionalities matter for: (a) Impacts (b) Incentives (c) Reducing assistencialismo (political role) But conditionalities need to be monitored to maintain credibility. 18
Proven Impacts (Summary of international evidence details at end of ppt) Targeting Outcomes Very progressive in most countries (but coverage varies substantially) Poverty & Inequality Impacts Strong in many countries (big bang-for-buck given relatively cheap) Redistributive impacts depend on size of transfer, coverage of poor Education Impacts Labor Impacts (Child, Adult) Good with Limits. enrollment, attendance (bring the kids to school) drop-out (keep them in school longer) But... repetition in some cases And test scores not higher (supply-side issue) Substantial reduction in child work Modest or no impacts on adult work effort (may LFP) Households invest part of the transfer (income-generating activities) Food, Nutrition, Health Impacts Good with Limits. food consumption & dietary quality Nutrition Outcomes: Mixed evidence for child growth Mixed impact on health care use Encouraging effects on Early childhood 19 Development Improvements in receptive language (Nicaragua) Memory gains (Ecuador) Socio-Emotional (Ecuador) Fine Motor Skills (Ecuador)
% of Benefits received by each quintile CCTs in LAC: Targeting Accuracy Conditional Cash Transfers Compared with Other Social Assistance Programs: Absolute Incidence 50% 40% 30% 20% 10% 0% Q1 Q2 Q3 Q4 Q5 CCTs Other Cash Scholarships School Feeding Other Feeding Source: Lindert, Skoufias and Shapiro (August 2006) 20
2a. Categorical Benefits: Social Pensions Objectives: To ensure basic old-age security for those not covered by the contributory pension system Eligibility: Varies. Universal for all elderly or targeted to poor elderly Financing: mostly financed by general tax revenues Benefit level & Incentive Compatibility: Setting appropriate benefit level is important: If high relative to minimum contributory pensions undermines incentives to contribute (Uruguay case) If too low, won t contribute to poverty alleviation, admin costs become large share of total (Argentina, Turkey) EXAMPLES: OECD Countries (Australia, New Zealand, Canada) Africa (South Africa,Namibia, Mauritius, Botswana) South Asia (India, Bangladesh, Nepal) LAC: (Argentina, Bolivia, Brazil Chile, Costa Rica, Uruguay) ECA: (almost all) 21
Examples - Social Pensions Universal social pensions Bolivia provides a universal social pensions (fixed cash transfer) to all citizens over 65. Multiple objectives: to return the equity in the privatized state enterprises to the people, to cover the large majority of elderly not covered by the pension program, and to help reduce poverty. The program costs about 1% of GDP and covers 0.7% of the population. Targeted social pensions South Africa old-age pension covers all women above 60 and men above 65, subject to a means-test. The program covered about 4.2% of the population and is funded through general taxes. The total program expenditure is about 1.4% of GDP in 2000. Impact: Incidence of poverty; Health status of children and older people; Enrollment rates of school age children 22
2b: Categorical Benefits Disability Assistance Objectives: To provide cash assistance to the disabled as a vulnerable group for those not covered by disability insurance Eligibility: Varies. Universal for all disabled or targeted to poor disabled. This raises two levels for screening: Disability certification. Classification of disability, institutional set-up / roles, time limits for recertification, etc. Means-testing / Screening based on (poverty) need (Also sometimes focused on disabled children categorically) Financing: mostly financed by general tax revenues Benefit level & Incentive Compatibility: Setting appropriate benefit level is important If high relative to disability insurance undermines incentives to contribute If high relative to other social assistance benefits, incentives to get certified for disability benefits EXAMPLES: Most OECD Countries ECA: (almost all countries) LAC: (e.g., Brazil Chile,Uruguay, Barbados, Bermuda, Trinidad and Tobago) Hong Kong (China) Africa: Liberia, South Africa 23
Operational Definitions of Disability in Medical Assessments Definition Advantages Disadvantages Inability to work Conceptually appropriate Consider full set of medical and other circumstances Sensitive to context (accessability of transportation, buildings, types of jobs, etc.) Discretion implies variability among assessors and/or expensive systems to minimize discretion through use of multiple assessors or review panels Moral hazard Based on official list of impairments or diagnoses Simpler to guarantee equal treatment of people with same conditions Easier to verify Does not recognize differences in severity Does not recognize interactions among multiple conditions Lists can be politically difficult to agree on 24
Interplay between disability benefits and targeted social assistance Albania Example 2.5% Coverage: increasing for DB, decreasing for SA (NE) Benefit levels: DB 3 times > SA (NE) Expenditures on DB crowding out SA Moral hazard? Albania Social Assistance Spending (%GDP) 2.0% 1.5% 1.0% 0.5% Poverty-targeted social assistance (Ndimhe Ekonomike) Disability assistance benefits 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 3.1 Ndimhe Ekonomike 3.2 Disability Allowance 3.3 Care Allowances 3.4 Other 25
2c. Categorical Benefits Family & Child Allowances Multiple Objectives: Support families to reduce child-raising costs Child protection objectives (reduce abandonment potential) Support to orphans Pro-fertility policies (e.g., Birth allowances in ECA) Eligibility: Varies significantly. Means-tested child benefit to the poor Universal benefit to all children under certain age (wide age range) Benefit Levels: often flat rate EXAMPLES: Most OECD countries ECA: virtually all Africa: Malawi, South Africa LAC: Argentina, Chile Common in OECD and East European and the Former Soviet Union 26
3. Near Cash: Food Stamps and Vouchers What are they? Food stamps or coupons are cash-like instruments that can be used to purchase food at authorized retail locations Vouchers are cash-like instruments that can be used to purchase specific services Alternative Currency. The value of the stamp or voucher is backed by government commitment to pay (reimburse retailers or service providers) Benefit Levels: In theory, some link to minimum consumption basket or minimum cost of service. Some food stamps programs restrict households to only by specific foods. In practice, food stamps benefits often only represent a small share of the cost of the food basket Eligibility and Administrative Requirements: Same as for cash but With added requirement of printing and distributing alternative currency Examples: Food Stamps: United States Honduras Sri Lanka Mexico Colombia Jamaica (until 2002) Vouchers: Numerous examples, see Georgia example next slide 27
Georgia Example: Using Vouchers to Complement Targeted Cash Assistance Cash benefits (TSA, pensions, disability, IDP benefits, etc.) Outside SSA: Education vouchers using PMT registry Social Services Vouchers + Child Protectio n PMT registry, MIS, One- Stop Shop Centers Electrici ty Voucher s Health Insuran ce Voucher s and other social insurance Outside SSA: Ministry of justice using PMT registry for provision of legal services
Outline What, Why, and When to Use Cash? Types of cash transfer programs (with extra on CCTs) Design & Implementation Summary: Pros and Cons Extra slides on CCT impacts Extra slides on UCTs
Design Considerations: Main Parameters Who receives the benefits? (Targeting) How much coverage? (fiscal space issue) How much do they receive? (Benefit Levels) Questions of inclusion 30
Who receives the benefits? Targeting: Beneficiary Selection Targeting mechanisms: categorical and geographically targeting; means-test (income, asset); proxy means; community targeting; self-targeting; [To be covered in detail in another session] There is no perfect targeting: Target groups typically receive 30-75% of direct benefits in cash transfer programs around the world; Cash transfers are better targeted than in-kind Entry and exit conditions must be well-known and be enforced: a steady flow of expected entry and exits to avoid dependency and exploding costs 31
How Much Coverage? Fiscal Space & Sustainability Scope of coverage largely depends on budget Budget needs to cover: Annual total benefit outlays And administrative costs (central and local, operating agents) Threat to sustainability: insufficient budget to meet program objectives Arrears Discretionary, instead of rule-based allocation of benefits Partial payments Understaffing, which leads to greater leakage Ad hoc adjustment to inflation, erosion of purchasing power Financing arrangement in a decentralized setting 32
How much do they receive? Setting Benefit levels There are many ways to complicate a program Benefits according to poverty level (continuous vs. brackets) Benefits differentiated by region (price differentials) Benefits differentiated by age, gender (incentives for girls, youth schooling) Add-on bonuses (school graduation, back-to-work, etc.) Generosity Measured by replacement-income concept or transfer-to-wage ratios Potential Incentive effects (to be discussed in separate session) Reduction of the labor effort of beneficiaries Crowding out of private transfers (remittances, charity) Changes in savings and investment behavior Changes in attitudes (e.g. less motivation to acquire human capital) 33
Making Cash Transfers Inclusive Particular attention to women Female headed households may face greater risks Women may make better use of transfers Poverty payoffs to better women s nutrition and empowerment shown to reduce half or more of infant malnutrition. Gender reviews to identify risks and legislative inequity Old-age pensions and family allowances tend to selftarget women Legislative reform to provide equal access to welfare Voice of marginalized groups Identification and decision making process, grievance Make sure that CCTs are NOT punitive to specific ethnic groups (e.g., the Roma) 34
Implementation Nuts & Bolts (1) Managing Info & Payments Institutional roles (decentralized, centralized) Managing Information: Intake process (interview, home visit, etc.) Data flows & management (registry) Eligibility decisions Recertification, updates Managing expectations, communicating Managing Payments: Delivery: EBCs, by mail, in cash, mobile phones Principles: Reliability, regularity, feasibility, depoliticizing payments (!), accountability, security 35
Implementation Nuts & Bolts (2) Monitoring, Overseeing, Evaluating Oversight and Controls All programs have some Fraud & Error (F&E) Prevention, Detection, Remedy O&C examples: audits, random-sample spot checks, performance reviews, hotlines, case investigations & follow-up Monitoring of Conditionalities (CCTs) Education information Heatlh Monitoring and Evaluation 36
Quality of Implementation Matters for Political Support The Quality of Implementation Matters for Public Opinion PERCEPTIONS LIABILITIES Perceptions of fraud & errors Perceived weaknesses in registries (operating systems) Lack of monitoring of conditionalities Perceptions of transfer dependency PERCEPTIONS ASSETS Coverage of the program Quality of operating systems Credible oversight & controls Targeting accuracy & perceptions of fairness Conditionalities when monitored (political role) Complementarities with exit doors Source: Lindert & Vincensini (2010) 37 Brazil Media Study
Outline What, Why, and When to Use Cash? Types of cash transfer programs (with extra on CCTs) Design & Implementation Summary: Pros and Cons Extra slides on CCT impacts Extra slides on UCTs
UCTs & CCTs - Summary Advantages Lower-cost solution to deliver benefits to poor Do not distort prices Consumers decide how to use cash Potential role as automatic stabilizers in crisis Benefits can be differentiated by need, HH size, composition Can be well targeted CCTs: proven impacts CCTs: political support Disadvantages Subject to price inflation Potential work disincentives Haven t always responded flexibly in crisis (ECA examples) Implementation can be information-intensive, require admin capacity Political economy of narrow targeting? CCTs require additional monitoring (educ/health) 39
Thank You Open for discussion! 40
Extra Slides on CCTs Fiszbein and Schady (2009)
Proportion of total benefits received CCT benefits are decidedly progressive 90% 80% 70% 60% 50% 40% 30% Bolsa Familia Chile Solidario Chile SUF Ecuador BDH Honduras PRAF Mexico Oportunidades Jamaica PATH Cambodia: JFPR Bangladesh FSSP 20% 10% 0% 1 2 3 4 5 6 7 8 9 10 Deciles of per capita consumption minus transfer
Proportion of households receiving transfers but with significant variation in coverage 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% Bolsa Familia Chile Solidario Chile SUF Ecuador BDH Honduras PRAF Mexico Oportunidades Jamaica PATH Nicaragua RPS Cambodia: JFPR Bangladesh FSSP Turkey SRMP Education Turkey SRMP Health 10.0% 0.0% 1 2 3 4 5 6 7 8 9 10 Deciles of per capita consumption minus transfer
Reductions in poverty among beneficiaries CCT impacts on consumption and poverty Median per capita consumption (US $) Average transfer (% of per capita consumption) Impact on per capita consumption (%) Impact: headcount index (% points) Impact: sqd. poverty gap (% points) Mexico (1999) Nicaragua (2002) Colombia (2006) Cambodia (2007) 0.66 0.52 1.19 0.75 20% 30% 13% 3% 8% 21% 10% -- 1.3** 5.3** 2.9** -- 3.4** 8.6** 2.2** --
Families spend a higher share of resources on food and obtain a more varied diet
Disincentive effects have not been a problem Substantial reductions in child work: Mexico: child labor among teenagers fell by 2% points for girls, and 5% points for boys Cambodia: reduction of 10% points in work for pay; average of 14 fewer hours worked for pay Modest reductions in adult labor market participation (Mexico, Ecuador, Cambodia), Households invest part of the transfer (evidence for Mexico and Brazil but not in Nicaragua)
CCT impacts on education outcomes CCT impacts on enrollment Age range Baseline enrollment Impact (% points) Size of transfer Colombia 8-13 14-17 91.7% 63.2% 2.1** 5.6*** 17% Chile 6-15 60.7% 7.5*** 3-7% Ecuador 6-17 75.2% 10.3*** 10% Mexico Grade 0-5 Grade 6 94.0% 45.0% 1.9 8.7*** 20% Grade 7-9 42.5% 0.6 Nicaragua 7-13 72.0% 12.8*** 30% Cambodia Grade 7-9 65.0% 31.3*** 2% Pakistan 10-14 29.0% 11.1*** 3%
Mixed effects in education Mexico and Colombia: Children learning apace with nonparticipant peers Cambodia: Beneficiaries have more schooling than children in the control group but didn t perform better on mathematics or vocabulary test
CCT impacts on health outcomes CCT impacts on health center visits Age range Baseline level Impact (% points) Size of transfer Colombia <24 months n.a. 22.8** 17% 24-48 months n.a. 33.2*** Chile 0-6 years 17.6% 2.4 7% Ecuador 3-7 years n.a. 2.7 10% Honduras 0-3 years 44.0% 20.2*** 9% Mexico 0-3 years 69.8% 8.4 20% Nicaragua 0-3 55.4% 13.1* 27%
Impacts on education and health outcomes concentrate among the poor Example: Nicaragua
Improvements in nutrition outcomes in some but not all cases CCT impacts on child nutrition (height-for-age z-scores) Age range Baseline level Impact (% points) Size of transfer Colombia <24 months n.a. 0.16** 17% 24-48 months 0.01 Ecuador <24 months -1.07-0.03 10% 24-48 months -1.12-0.06 Mexico 12-36 months n.a. 0.96 cm** 20% Nicaragua <60 months -1.79 0.17** 27% Honduras <72 months -2.05-0.02 9%
Are conditions necessary for impacts? Mexico: Children in households withouth monitoring of conditionalities were 5.4% points less likely to enroll in school Ecuador: Program effects are only significant for households that believed transfer are conditional Cambodia: Program has no effect on enrollment for siblings at other levels (not part of program) Malawi: Experimental program early results show UCT and CCT effects similar
Extra Slides on UCTs 53
3.4 Setting Benefit levels Type of program Guaranteed minimum income Last resort programs Food stamps Family allowances Heating allowances Social pension Benefit level depends on: Eligibility threshold income of beneficiary household Poverty gap Food poverty gap The cost of raising a child Seasonal increase in the heating cost during cold season Poverty line Minimum contributory pension 54 Low income countries Cost of an adequate food basket The food poverty line. 54
3.4 Benefit levels in practice Limited to 4 types of programs, 2 regions Family allowances (n = 15) Last-resort programs (n = 20) Conditional cash programs (n = 6) Social pensions (n = 14) 55 Generosity of Social Safety Net Programs from ECA and LAC Regions 0 20 40 60 Benefit in % of the consumption of recipient household Source: Tesliuc (2008, forthcoming) and Shady (2007) 55
3.5 Work Disincentives? Generosity Work disincentives depend on three key factors Marginal tax rate on earnings Beneficiary household with supply of labor 56
Key Ingredients for Implementation (1) (OJO! Administrative Capacity ) 1. Registry and Intake: Process, Institutional Arrangements, Questionnaires, Outreach methods, National database management, Technology Automation, Unique IDs, Appeals processes, etc. Data Collection (Entry to Registry) Data Entry and Management of Household Registry (registry) Determine Eligibility (Program Specific Criteria) 2. Payments Processes: Banking system (ATMs, crediting accounts) Post offices or by mail Electronic benefit cards for use at retail stores Official ration stores, private stores Public agencies and offices Payment centers Mobile phone technologies 2. Payments Principles: Reliability, regularity Minimizing costs of delivery Depoliticizing (!) payments Accountability, transparency Security (thefts, attacks, etc.) 57
Key Ingredients for Implementation (2) (OJO! Administrative Capacity ) 3. Oversight and Controls: Detect, Remedy Fraud and Errors Reduce duplications Cut costs, waste Improve transparency, accountability Internal &External Registry Cross-Checks Operational and Financial Audits Quality Control Reviews Case Investigations & Follow Up Hotlines 4. Monitoring and Evaluation Inputs, Outputs Implementation Outcomes Information Systems Monitoring Reports Impact Evaluations Inputs (Spending) Outputs (Beneficiaries, benefits) Inter. Outcomes Targeting Accuracy Community Oversight Outcomes Alleviate Poverty [Topic of another session] 58
Key Ingredients for Implementation (3) (OJO! Administrative Capacity ) 4. Institutional Arrangements No single blueprint Depends on country context Many models Two Aspects: Flows of Information Flows of Funds $$ Challenges: Administrative Capacity (Central, Local) Many actors (especially in decentralized context) Mandates and jurisdictions Third-party implementation and need for performance monitoring & incentives Family Family Family Social Welfare Ministry Federal Bank (payment agent) OR Municipalities Municipalities (Block Grants) Family Family Family 59
Example: China Minimum Living Allowance program ( Dibao ) Target group Targeting method Eligibility criteria Eligibility rules Financing Implementation Benefit level Benefit formula Households whose per capita income is below the dibao line Income and asset test; community Income, assets, general living condition Nationally determined framework, locally set standard Largely provincial + municipal; Central govt support poor regions only Decentralized units of the line ministry, village/community committee Varies depending on the applicant s earned income Dibao Threshold Total income of the family 60
Example: Mongolia Child Money Program Promised in 2003-04 during election to establish universal child benefit Program established in 2005 introduced a targeted program using proxy means-testing to identify the poor. Requirements include: (a) family income below minimum substantive level; (b) have at least one child aged 18 or younger; (c) enroll an school-age children in school; (d) ensure all children have received their mandatory immunizations; (e) ensure that their children are not engaged in illegal child labor. By December 2005, 609,000 children from 303,000 households (24% of the population) were covered. Very limited capacity to implement. Amendments to the Social Welfare Law of July 2006 universalized the CMP to all families with children and the benefit was increased in January 2007 from 36,000 MNT to 136,000 MNT per child a year. As energy prices fall and affected by the global economic crisis, the need to target is recognized and being discussed. 61
Example: Sri Lanka Food Stamp Program Established in 1979, the program subsidized the consumption of basic goods for the poorest households. Eligibility was determined by a means-test based on self-reported HH income, with a marginal adjustment made to hh size. Can use the stamp to buy basic food (rice, wheat flour, sugar, milk products, etc.) Expenditure reached 1.3% of GDP in the 1980s. Replaced by cash transfers and subsidies in 1989 and 1995 62