WIDER Seminar Series - Kyle McNabb on social cash transfers in Zambia

On 9 May, UNU-WIDER Research Fellow Kyle McNabb will speak on tax-benefit microsimulations in Zambia. 

Abstract – Assessing the targeting efficiency of the Zambian social cash transfer: A tax-benefit microsimulation approach 

Whilst tax-benefit microsimulation models are commonplace in developed countries, only recently have they been made available for developing countries. Similarly, often due to a lack of data, the targeting effectiveness of cash transfers in Africa has not often been thoroughly evaluated. With this in mind, we utilise the MicroZAMOD microsimulation model in order to assess the targeting efficiency of the Zambian Social Cash Transfer (SCT). 

We find that the current combination of categorical targeting and proxy means test (PMT) undermine the targeting efficiency (as measured by inclusion and exclusion errors) of the SCT in reaching those living in extreme poverty. We then simulate a number of reforms to the current criteria, finding that by removing the categorical elements, the PMT itself performs much better in terms of reducing targeting errors. Compared to a universal basic income, the results suggest that a variant of the SCT targeted to older persons performs particularly favourably in reducing poverty rates, for a lesser cost. Indeed, the poverty gap falls by over 15% compared to the current scenario. We further use the microsimulation model to explore financing options, by levying additional taxes only those who are considered non-poor by developed country standards.

WIDER Seminar Series

The WIDER Seminar Series showcases recent and ongoing work on key topics in development economics. The weekly sessions held in Helsinki are open to local and visiting researchers, policy makers, and others interested in development topics. Click here to learn more