DEVELOPMENT Poverty targeting: is it pro-poor or anti-poor? Stephen - PowerPoint PPT Presentation

DEVELOPMENT Poverty targeting: is it ‘pro-poor’ or ‘anti-poor’? Stephen Kidd 10 th January 2019

Why undertake poverty targeting? Lower Economic or spending and justice? taxes? 2

If there are limited resources, it is best to prioritise the ‘poor’ = $1 per beneficiary $100 = $5 per beneficiary 3

Adapted political settlement approach to understand the political economy of targeting The balance or distribution of power between contending social groups and social classes, on which the state is based Elites Allocation of resources Powerless Powerful 4

Alternative views on allocation of resources and the value of transfers If the size of the pie is fixed, it makes sense to concentrate scarce resources on the poorest The more people covered by a programme, the more popular it will be, and the more funding it will attract, so the higher the transfer 5

In a democratic context, who is more powerful? The extreme poor? Those on middle incomes? 6

Is the size of the pie fixed? Are there ‘limited resources’? 7

Higher budgets and transfer values with higher coverage due to building alliances across wealth distribution The higher the coverage of a scheme, the broader the alliance across the recipients. So, if a scheme includes only the ‘poor,’ the 20 The “rich” beneficiaries are weak politically If the beneficiaries Middle incomes include a broader group, 60 they become more powerful, which leads to more investment and The higher quality schemes “extreme 20 poor” 8

Poor relief in 18 th and 19 th Centuries • Poor Relief in Europe began in 17 th Century Investment in Poor Relief in 1820 • The aim was to address 3 increasing poverty and 2.5 social exclusion as a result Percentage of GDP of industrialisation and 2 urbanisation 1.5 • A key driver was fear of 1 social unrest, deriving from 0.5 French Revolution 0 • It also aimed to stop England Netherlands Belgium France migration to the cities 9

The demise of Poor Relief • High budgets for Poor Relief in early 19 th Century • As democracy grew during the 19 th Century, Poor Relief began to Fall in spending on Poor Relief in 19 th Century change 3 • As middle class men obtained the 2.5 vote, they were less willing to be Cost as a % of GDP taxed to pay for poor relief, as 2 they did not benefit from it 1.5 • Development of concepts of 1 � deserving � and � undeserving � 0.5 poor 0 England Netherlands Belgium France • Support for � undeserving poor � 1820/30 1880 began to be made conditional – through the workhouse 10

Late 19 th and early 20 th Century: Growth in programmes benefitting middle class State pension schemes grew in high income countries 1.6 1.4 1.2 Cost as % of GDP 1 0.8 0.6 0.4 0.2 0 Australia Denmark Germany New Zealand Norway Sweden UK 1910 1930 Other services provided on a universal basis: e.g. primary education 11

security investment Post 2 nd World War expansion in social Percentageof GDP 10% 15% 20% 25% 0% 5% Level of investment in social security in high–income countries Italy France Portugal Austria Belgium Old Age Finland Spain Slovenia Survivors Luxembourg Hungary Denmark Germany Disability Czech Republic Japan Ireland Sweden Children Netherlands Slovak Republic Norway Unemployment United Kingdom Latvia Switzerland Estonia New Zealand Other United States Australia Turkey Israel Canada Iceland Chile Korea 12

Inclusive vs targeted Costs of social pensions: Percentage of GDP 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Georgia Mauritius Surinam Seychelles Trinidad Namibia Samoa South Africa Lesotho Kosovo Guyana Maldives Nepal Kiribati Cape Verde Swaziland Timor Leste Brunei Paraguay Hong Kong Thailand Korea Botswana Ecuador Kenya Vietnam Mexico Belize Panama Colombia Guatemala China Under 2/3 coverage of Bangladesh Over 2/3 coverage of those of eligible age those eligible age Peru El Salvador Fiji India Malaysia Philippines Jamaica Indonesia 13

Higher coverage of pensions is associated with higher transfer values Relationship between pension coverage and transfer value in countries scoring 5+ on Democracy Index 14

Level of investment in types of schemes 5.0% 4.5% Cost of scheme as percentage of GDP 4.0% 3.5% 3.0% Old Age Pension 2.5% Disability 2.0% benefit Child 1.5% benefit 1.0% CCT 0.5% 0.0% a m a l a c a n a l a s s d a o s a a o s y r a i o e i e i u a i o c h c u a i c n z c a c g a b p l l l d i d i b i i t o i a i n u i m t i t l i r r t r x a r n e s t e o r i a i i m f u f i g f n g o p m r i n N a r i B e A s A A u r h p k u e u u n e S M p i a e u c e r a c G r e a h h a o h g N L i U E S y T J R b l M M M r t t t e i u u z u A h S z U o o o P y S S S g r y K 15

Transfer values for different schemes 40% Transfer value as percentage of GDP per capita 35% Social pension Disability 30% benefit 25% 20% 15% Child 10% Benefit CCT 5% 0% o l i l d y a a a a n a s a e a a a a s a o l a i t i h a c c u l c i i e i z a n n i a i n c z a r p g g i l n u i i i i n i t a b d i a t h i o e a r r r e t r t r t x o s a r g y f f i f i r i i n o o C n g g r p z B r N n A i A A e B s a u k e e n i i e u e n e i p M r e N K r G g h G h a G h g o L a i a T b M M l r t t t r T P i A u z u u A h U o o o P S S S 16

Comparison of transfer values in Malawi and Lesotho 100% Percentage point change of real transfer 80% value (baseline starting year of transfer) 80% 74% Lesotho OAP real 60% 42% value 30% 40% Lesotho OAP real 20% value trend 0% 0% 0% Malawi SCT (minimum -17% -21% benefit level) real -20% value -40% -24% -44% Malawi SCT real value -40% trend -60% 4 5 6 7 8 9 0 1 2 3 4 5 6 7 0 0 0 0 0 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Year 17

Poverty targeting benefits the rich Comparison of: Change in income after tax and • Targeted programme of 0.5% of GDP transfer given to the poorest 20% of the population • Universal scheme of 5% of GDP given to Targeted Universal everyone on an equal basis. 150 90 75 60 Assumptions: 49.0 25 0 • Same tax for everyone Net income -2.5 -4.0 -7.5 -35.0 • Perfect targeting 8000 -150 Wealth distribution 7000 6000 5000 Income -250 4000 -300 Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 3000 2000 1000 0 18 Poorest Quintile 2 Quintile 3 Quintile 4 Richest

“Poor”: two meanings Unfortunate Bad You poor Poor quality thing! Vulnerable Lazy Undeserving Deserving poor poor Unconditional Conditional targeted transfer targeted transfer 19

Aim of social protection: Idea that it is to support the poor and vulnerable belongs to a particular world view Definition by Devereux and Sabates-Wheeler in Transformative Social Protection • Social Protection is: ‘Initiatives that provide income or consumption transfers to the poor, protect the vulnerable against livelihood risks and enhance the social status and rights of the marginalised; with the overall objective of reducing the economic and social vulnerability of poor, vulnerable and marginalised groups’ 20 20

Social protection for “us” – as citizens – or for “the other” Citizens The other We are all vulnerable Vulnerable groups We may The We may lose The elderly experience a our job disabled disability We will all age The We hope to Orphans and be less have children unemployed able to work We all can access social The poor protection when affected by a contingency 21

Universal declaration of human rights Article 22: “ Everyone , as a member of society, has the right to social security ” Article 25 : “(1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control . (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.” 22

Is accurate targeting possible in low and middle-income countries? 23

Relationship between coverage and exclusion in targeting Mongolia Child Money 100 Bolivia Georgia 90 Mauritius 80 Coverage (percentage) 70 South Africa OAG South Africa CSG 60 50 40 Indonesia PMT Pilot Indonesia: BLT 30 Kenya HSNP Philippines: Pantawid Rwanda: Ubudehe Colombia FeA 20 Mexico: Oportunidades Georgia: TSA Brazil: Bolsa Familia India: OAP Rwanda: DS 10 Ethiopia PSNP Vietnam: Poor List Indonesia: PKH 0 0 20 40 60 80 100 Exclusion error (percentage) 24

Effectiveness of poverty targeting Pakistan BISP (2015) Indonesia SP Cards (2017) 78% Ethiopia PSNP (2015) Philippines Pantawid (2015) 25