Estimating the Benefit Incidence of an Anti-Poverty Program using Propensity Score Matching

We apply recent advances in propensity-score matching (PSM) to the problem of estimating the distribution of net income gains from an Argentinean workfare program. PSM has a number of attractive features in this context, including the need to allow for heterogeneous impacts while optimally weighting observed characteristics when forming a comparison group. The average direct gain to the participant is found to be about half the gross wage. Over half of the beneficiaries are in the poorest decile nationally, and 80% are in the poorest quintile. Our PSM estimator is reasonably robust to a number of changes in methodology.

Jalan and Ravaililon (2003)Urban.Nearest neighbor propensity score matching.Local governments and nongovernmental organizations submitted proposals for "socially useful projects," which were then ranked according to some criteria. Projects last at most six months.Average gain in household income for participants was $103 dollars, with greater gains for younger people.http://www1.worldbank.org/prem/poverty/ie/dime_papers/118.pdfLower average income, higher average family size, more likely to have borrowed to meet their basic needs, receives less from informal sources and more likely to participate in some form of political organization.