Cash transfers, poverty, and inequality in Latin America and the Caribbean
- We assess 67 non-contributory cash transfer programs (conditional, pensions, and other) in 17 Latin American and Caribbean countries to identify factors that keep them from reducing poverty and inequality.
- Brazil, Suriname, Chile, Costa Rica, Panama, and Uruguay consistently earn the highest assessment scores across three dimensions of size (number of beneficiaries, size of transfer, and total budget) and three dimensions of targeting (coverage, leakage, and quality of demographic targeting).
- Non-contributory cash transfer programs reduce the poverty rate by 1.9 percentage points, the poverty gap by 2.0 pp, and the Gini coefficient by 0.7 pp. The largest changes are recorded in Argentina, Suriname and Panama.
- Their effect on poverty is hampered by small size and under-coverage. The transfers represent approximately one third of the poverty gap, and only 55% of the population in poverty receives them. Their budget is about one fourth of the aggregate poverty gap. Children and Indigenous people are underrepresented among the beneficiaries, relative to their poverty rate.
- To close the gap in coverage, we recommend: (i) using modern poverty mapping techniques along with active, on-the-ground searches and (ii) recertifying eligibility more frequently by using highly interoperable administrative data and social registries.
