Self-Targeting Accuracy in the Presence of Imperfect Factor Markets: Evidence from Food-for-Work in Ethiopia

Journal of Development Studies, Forthcoming

Posted: 26 May 2011

See all articles by Christopher B. Barrett

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management

Daniel C. Clay

Michigan State University - Institute of International Agriculture

Date Written: June , 2003

Abstract

Effective targeting of transfers is a key issue in public policy to combat poverty. Much faith is presently placed in self-targeting mechanisms such as public employment schemes supported by food-for-work transfers. Where targeting errors have been observed, these are usually attributed to mismanagement of key operational details, such as the project's wage rate. Using a unique data set from rural Ethiopia, we demonstrate that targeting errors may also have structural causes in some low-income countries. We hypothesis that imperfect factor markets generate a predictable dispersion across households in reservation wage rates that breaks down the unconditionally positive relation between income and shadow wages on which the theory of self-targeting public employment programmes rests. Our results confirm that the inaccuracy of FFW targeting stems from the fact that, in rural Ethiopia, higher income households are endowed with more labour per unit of land or animal. Due to poor factor markets in land and livestock these labour-abundant households have lower marginal labour productivity on farm, thereby depressing the reservation wage rates they find acceptable for FFW participation.

Suggested Citation

Barrett, Christopher B. and Clay, Daniel C., Self-Targeting Accuracy in the Presence of Imperfect Factor Markets: Evidence from Food-for-Work in Ethiopia (June , 2003). Journal of Development Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1847703

Christopher B. Barrett (Contact Author)

Cornell University - Charles H. Dyson School of Applied Economics & Management ( email )

315 Warren Hall
Ithaca, NY 14853-7801
United States
607-255-4489 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://aem.cornell.edu/faculty_sites/cbb2/

Daniel C. Clay

Michigan State University - Institute of International Agriculture ( email )

324 Agriculture Hall
Lansing, MI 48824
United States
517-355-0174 (Phone)

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