Résumé

This paper demonstrates that there are potentially large returns to social protec- tion policy that stakes out a productive safety net below the vulnerable and keeps them from slipping into a poverty trap. Much of the value of the productive safety net comes from mitigating the ex ante e¤ects of risk and crowding in additional investment. The analysis also explores the implications of di¤erent mechanisms of targeting social protection transfers. In the presence of poverty traps, modestly regressive targeting based on critical asset thresholds may have better long-run poverty reduction e¤ects than traditional needs-based targeting.

Please go to:
http://siteresources.worldbank.org/SOCIALPROTECTION/Resources/SP-Discussion-papers/Social-Protection-General-DP/0804.pdf