Public Finance, Governance, and Cash Transfers in Alleviating Poverty and Inequality in Chile

28 Pages Posted: 2 Dec 2009  

Claudio A. Agostini

Universidad Adolfo Ibañez

Phil Brown

GeoSource Capital Solutions

Diana Paola Gongora

Fiscalia Nacional Economica

Multiple version iconThere are 2 versions of this paper

Date Written: November 29, 2009

Abstract

As the Chilean government seeks to reduce both poverty and inequality through cash transfers to poor households, local governments are responsible for both identifying the poor and allocating transfers. Until recently, however, evaluating the effectiveness of local governments in enacting these policies has been restricted by data limitations. The paper builds on recent evidence that cash transfers had highly variable impacts on poverty and inequality at the county level in 2002. In particular, we explore how local public finance and the strength of the governing mandate influence the efficiency of cash transfers. With a richly-specified model, we find that public spending on goods and services, the fraction of available subsidies claimed by the local government, and the share of county land that is zoned for industrial purposes are all correlated with considerable reductions in poverty and inequality. In addition, the strength of the governing mandate weakly influences the efficiency of transfers in reducing poverty, but not inequality. These results demonstrate that a better understanding of such institutions can lead to more efficient targeting for social programs.

Keywords: Cash Transfers, Monetary Transfers, Inequality, Poverty, Municipalities, Local Governments

JEL Classification: H53, I32, O15

Suggested Citation

Agostini, Claudio A. and Brown, Phil and Gongora, Diana Paola, Public Finance, Governance, and Cash Transfers in Alleviating Poverty and Inequality in Chile (November 29, 2009). Available at SSRN: https://ssrn.com/abstract=1515469 or http://dx.doi.org/10.2139/ssrn.1515469

Claudio A. Agostini (Contact Author)

Universidad Adolfo Ibañez ( email )

Diagonal Las Torres 2640
Santiago
Chile
(562)3311130 (Phone)

HOME PAGE: http://www.uai.cl/profesores/claudio-agostini

Phil Brown

GeoSource Capital Solutions ( email )

PO Box 535
Charles Town, WV 25414
United States

Diana Paola Gongora

Fiscalia Nacional Economica ( email )

Agustinas 853
Santiago
Chile
(562)7535600 (Phone)
(562)7535607 (Fax)

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