Benefit Incidence and the Timing of Program Capture

Abstract

Benefits from schooling and antipoverty programs in rural India were captured early by the nonpoor. The poor tend to benefit from program expansion, and lose from contraction. Conventional methods of assessing benefit incidence hide this fact.

Survey-based estimates of average program participation conditional on income are often used in assessing the distributional impacts of public spending reforms.

But program participation could well be nonhomogeneous, so that marginal impacts of program expansion or contraction differ greatly from average impacts.

Using the geographic variation found in sample survey data for rural India for 1993-94, Lanjouw and Ravallion estimate the marginal odds of participating in schooling and antipoverty programs. Their results suggest early capture of these programs by the nonpoor.

Thus, conventional methods of assessing benefit incidence underestimate the gains to India's rural poor from higher public outlays, and their loss from program cuts.

This paper - a product of Poverty and Human Resources, Development Research Group - was prepared as a background paper for the Bank's 1998 Poverty Assessment for India. The authors may be contacted at [e-mail] or [e-mail].