On the Targeting and Redistributive Efficiencies of Alternative Transfer Instruments

17 Pages Posted: 29 Apr 2004

See all articles by David P. Coady

David P. Coady

International Monetary Fund (IMF)

Emmanuel Skoufias

World Bank


The distributional characteristic provides an attractive alternative to conventional approaches used to evaluate the targeting performance of transfer programs. We decompose it into two components that are useful both conceptually and empirically; one capturing the targeting efficiency of the instrument, the other its redistributive efficiency. The redistributive index can also be generalized for the purposes of evaluating the degree of progressivity in tax-benefit structures. For illustrative purposes, we present an empirical application of the distributional characteristic and its decomposition using Mexican data. The welfare gains from using categorical targeting and means testing reflect improvements in redistributive and targeting efficiency respectively.

Suggested Citation

Coady, David P. and Skoufias, Emmanuel, On the Targeting and Redistributive Efficiencies of Alternative Transfer Instruments. Review of Income and Wealth, Vol. 50, No. 1, pp. 11-27, March 2004. Available at SSRN: https://ssrn.com/abstract=522052

David P. Coady (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Emmanuel Skoufias

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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