Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283796 
Year of Publication: 
2023
Series/Report no.: 
WIDER Working Paper No. 2023/100
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
This study evaluates which type of benefit-a universal benefit, a proxy mean-tested benefit, or a categorical benefit- better cushions the poverty effects of income shocks in a developing economy. We compare the effectiveness of the three benefit schemes on poverty first conceptually and then by considering two different crisis scenarios, the COVID-19 pandemic and a hypothetical agricultural shock, in a tax-benefit microsimulation model for Ethiopia. The results suggest that while the proxy-means-tested benefits are the most effective in reducing the poverty gap index, a simple categorical benefit is equally good in lowering the headcount poverty. Universal benefits may lead to lower poverty increases when crises hit. This suggests that there could be a trade-off between minimizing poverty during normal times and offering protection against shocks when the poverty incidence changes.
Subjects: 
social protection
income distribution
poverty
microsimulation
COVID-19
Ethiopia
JEL: 
C81
D31
H55
I32
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-408-3
Document Type: 
Working Paper

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