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Poverty Traps and the Social Protection Paradox

In: The Economics of Poverty Traps

Author

Listed:
  • Munenobu Ikegami
  • Michael R. Carter
  • Christopher B. Barrett
  • Sarah Janzen
Abstract
Progressively targeted cash transfers remain the dominant policy response to chronic poverty in developing countries. But are there alternative social protection policies that might have larger poverty impacts over time for the same public expenditure? To explore this question, this paper develops a dynamic stochastic model of of consumption and asset accumulation by households that confront a non-convex production technology and face missing financial markets. The model demonstrates that a hybrid social protection policy, which devotes resources to funding “state of the world contingent transfers” (SWCTs) to vulnerable, but non-poor households in the wake of negative shocks, can result in lower rates of poverty in the medium term than does a conventional cash transfer policy. We also explore the prospects for using subsidized index insurance as a way to implement SWCTs and find that an insurance-based hybrid policy can result in lower total public expenditures than a conventional cash transfer social protection program.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Munenobu Ikegami & Michael R. Carter & Christopher B. Barrett & Sarah Janzen, 2017. "Poverty Traps and the Social Protection Paradox," NBER Chapters, in: The Economics of Poverty Traps, pages 223-256, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:13834
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    Citations

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    Cited by:

    1. Jerome Ballet & Damien Bazin & François‐Regis Mahieu, 2020. "A policy framework for social sustainability: Social cohesion, equity and safety," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1388-1394, September.
    2. Premand, Patrick & Stoeffler, Quentin, 2022. "Cash transfers, climatic shocks and resilience in the Sahel," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    3. Nathaniel Jensen & Munenobu Ikegami & Andrew Mude, 2017. "Integrating Social Protection Strategies for Improved Impact: A Comparative Evaluation of Cash Transfers and Index Insurance in Kenya," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(4), pages 675-707, October.
    4. Sarah A. Janzen & Michael R. Carter & Munenobu Ikegami, 2021. "Can insurance alter poverty dynamics and reduce the cost of social protection in developing countries?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(2), pages 293-324, June.
    5. Schnitzer,Pascale & Stoeffler,Quentin, 2021. "Targeting for Social Safety Nets : Evidence from Nine Programs in the Sahel," Policy Research Working Paper Series 9816, The World Bank.
    6. Dylan Fitz & Shyam Gouri Suresh, 2021. "Poverty traps across levels of aggregation," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 16(4), pages 909-953, October.
    7. Pu Liao & Xianhua Zhou & Qingquan Fan, 2020. "Does agricultural insurance help farmers escape the poverty trap? Research based on multiple equilibrium models," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 203-223, January.

    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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