The Contribution of Increased Equity to the Estimated Social Benefits from a Transfer Program : An Illustration from PROGRESA/Oportunidades
Most impact evaluations of Conditional Cash Transfers (CCTs) and Unconditional Cash Transfers (UCTs) focus on the returns to increased human capital investments that will be reaped largely or exclusively in the future (e.g., when current children h...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/897871491831102595/The-contribution-of-increased-equity-to-the-estimated-social-benefits-from-a-transfer-program-an-illustration-from-PROGRESA-oportunidades http://hdl.handle.net/10986/26371 |
| Summary: | Most impact evaluations of Conditional
Cash Transfers (CCTs) and Unconditional Cash Transfers
(UCTs) focus on the returns to increased human capital
investments that will be reaped largely or exclusively in
the future (e.g., when current children have increased
productivities as adults). But the objectives of these
programs are not only to increase human capital investments
with implications for future levels and distributions of
income but also to alleviate current poverty and reduce
current inequality. The current distributional gains from
such programs depend on the degree of inequality aversion in
the social welfare function. Simulations show that, for a
range of inequality aversion parameters, the welfare gains
from current redistribution for the Mexican PROGRESA CCT
program can be as large, or possibly much larger, than the
estimated present discounted value of future earnings from
human capital investments in lower and upper secondary
schooling. These, moreover, are underestimates of the gains
from redistribution because, in addition to current gains,
such gains will be augmented in the future through the
distribution of the returns on the human capital investments
induced by cash transfer programs. Therefore, to fully
evaluate such programs, it is critical to incorporate the
distributional gains, not only the impacts on human capital investments. |
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