Have Cash Transfers Succeeded in Reaching the Poor in Latin America and the Caribbean?

Abstract

We present novel estimates of the quality of targeting of conditional cash transfer (CCT) and non-contributory pension (NCP) programs in Latin-America and the Caribbean. Our contribution is novel in that we use both national and international poverty lines, provide differentiated estimates for urban and rural areas, and compare CCT and NCP programs. We show that leakage to the non-poor coexists with pervasive under-coverage of all poor, including the extreme poor. On average, CCTs cover only 50.6 percent of the extreme poor in households with children under 18 years of age. Similarly, NCPs cover only 53.2 percent of the extreme poor in households with elderly members who do not receive a contributory pension. At the same time, 39.2 percent of CCT beneficiaries and 48.6 percent of NCP beneficiaries are not poor, highlighting the potential need for retargeting and recertification. In most countries, retargeting could produce a substantial double benefit in terms of poverty reduction and fiscal savings.