The Contribution of Increased Equity to the Estimated Social Benefits from a Transfer Program: An Illustration from Progresa/Oportunidades

29 Pages Posted: 14 Apr 2017

See all articles by Harold Alderman

Harold Alderman

International Food Policy Research Institute (IFPRI)

Jere Behrman

University of Pennsylvania - Department of Economics

Date Written: April 10, 2017

Abstract

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.

Keywords: Inequality, Educational Sciences

Suggested Citation

Alderman, Harold and Behrman, Jere R., The Contribution of Increased Equity to the Estimated Social Benefits from a Transfer Program: An Illustration from Progresa/Oportunidades (April 10, 2017). World Bank Policy Research Working Paper No. 8026. Available at SSRN: https://ssrn.com/abstract=2951471

Harold Alderman (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Jere R. Behrman

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7704 (Phone)
215-573-2057 (Fax)

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