Cited by 104Social Policy and Reform StudiesIncome, Poverty, and InequalityFiscal Policies and Political Economy

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Is More for the Poor Less for the Poor? The Politics of Means-Tested Targeting

Gelbach, Jonah B., Pritchett, Lant·2002·Topics in Economic Analysis & Policy

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Abstract

Standard economic analysis suggests that when the budget for redistribution is fixed, income transfers should be targeted to (i.e. means-tested for) those most in need. However, both political scientists and economists long have recognized the possibility that targeting might undermine political support for redistribution. We formalize this recognition, developing a simple economy in which both non-targeted (universally received) and targeted transfers are available for use by the policymaker. When the budget can be taken as fixed, full use of the targeted transfer is optimal. However, when we allow the budget to be determined through majority voting (with the policymaker choosing the share of the budget to be spent on each type of transfer), the optimal degree of targeting is zero. More strikingly, we show that if the policymaker naively ignores political considerations, the resulting equilibrium actually minimizes not only social welfare, but also the welfare of poor and middle income agents. Thus political considerations cannot generally be regarded as simply another “small" extension of standard models. As a result, future models and actual policies advocating the use of targeting through means-testing should account explicitly for the role of political considerations.

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POLITICAL CONDITIONS AND FEMALE LABOUR FORCE PARTICIPATION
Mujahid, N. (2016)

Authors: Gelbach, J. B., & Pritchett, L.
ORCID: Gelbach, Jonah B.
Pritchett, Lant
Venue: Topics in Economic Analysis & Policy
Publisher: Walter de Gruyter GmbH
Published: 2002-07-17
Volume: 2
Issue: 1
ISSN: 1538-0653 (ISSN-L)
DOI: 10.2202/1538-0653.1027
OpenAlex: W2029699756
Cited by: 104
References: 0
Citations by year: 2026: 2 · 2025: 1 · 2024: 3 · 2023: 1 · 2022: 5 · 2021: 5 · 2020: 19 · 2019: 1 · 2018: 4 · 2017: 1 · 2016: 7 · 2015: 5 · 2014: 4 · 2013: 5 · 2012: 6
FWCI: 21.73
Type: journal article
Language: en
Open access: closed
Locations: Topics in Economic Analysis & Policy (publishedVersion)
RePEc: Research Papers in Economics (submittedVersion)
Topics: Social Sciences › Political Science and International Relations › Social Policy and Reform Studies
Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Fiscal Policies and Political Economy
Keywords: income redistribution, majority voting, budget allocation, social welfare, poverty, transfer payments, political economy of redistribution

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Is More for the Poor Less for the Poor? The Politics of Means-Tested Targeting

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