Chapter

Poverty Alleviation: Efficiency and Equity Issues

Pranab Bardhan and Christopher Udry

in Development Microeconomics

Published in print May 1999 | ISBN: 9780198773719
Published online November 2003 | e-ISBN: 9780191595929 | DOI: http://dx.doi.org/10.1093/0198773714.003.0011
 Poverty Alleviation: Efficiency and Equity Issues

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Focuses on the equity‐efficiency trade‐off that is central to the analysis of poverty, looking in particular at cases in which a consideration of aspects such as information, externalities, and transaction costs reveals the trade‐off to be false or exaggerated. A brief note on the measurement of poverty is followed by a discussion on the trickle‐down effect of growth and on the linkage between redistribution and growth. Next, asset redistribution policies such as land reforms with tax‐transfer policies in terms of efficiency are compared, and a model with private information where a lump‐sum transfer is shown to be superior to a credit –subsidy is presented. Then, the targeting and cost‐effectiveness of government transfer programmes are discussed, with the focus on programmes that work through self‐selection and on the externalities involved in group‐ or area‐specific targeting. Finally, governance structure and role of decentralization through local self‐governing institutions in improving policy effectiveness are considered.

Keywords: efficiency; equity; governance; poverty; redistribution; self‐selection; subsidies; targeting; tax; trickle‐down

Chapter.  8978 words.  Illustrated.

Subjects: Economic Development and Growth

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