Targeting social transfers to the poor in Mexico

Author(s)/Editor(s): Coady D, Parker S
Publisher/Organizer: IMF International Monetary Fund
Publication date: March 2009
Number of pages: 30
Language: English



Overview

“Mexico's main social support program, Oportunidades, combines two methods to target cash to poor households: an initial self-selection by households who acquire knowledge about the program and apply for benefits, followed by an administrative determination of eligibility based on a means test.

Self-selection improves targeting by excluding high-income households, while administrative targeting does so mainly by excluding middle-income households.

The two methods are complementary: expanding program knowledge across households substantially increases applications from non-poor households, thus reinforcing the importance of administrative targeting.

The paper shows that targeting can be further improved through redesigning the means test and differentiating transfers according to demographic characteristics…..”

“There is a growing recognition in the development community that many existing safety net programs in developing countries are very badly targeted with a large proportion of program benefits leaking to higher income households and a substantial proportion of poor households being excluded. A recent review of the targeting performance of such programs by Coady, Grosh, and Hoddinott (2004a) found a wide variation in targeting performance and also a strong positive correlation between the number of targeting methods used in a program and targeting performance. However, the data used in the analysis did not permit a deeper evaluation of the relationship between each targeting method and targeting performance. This paper provides new evidence on this issue by comparing the implications of two targeting methods that are commonly combined in practice, namely, self-selection by households and administrative selection of households by program officials.”

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