Human capital, targeting and social safety nets: An analysis of household data from Zimbabwe

Abstract

This article considers the issue of targeting social services to the poor in developing countries. One important, although often neglected, dimension of poverty is a household's ability to carry out human capital formation. It is argued that defining poverty with reference to human capital has conceptual advantages over the more frequently used income definitions (poverty lines), as well as having practical advantages for policy makers in poor countries. Analysis of an urban household data set from Zimbabwe shows that indicators of some aspects of human capital poverty are strongly correlated with particular household characteristics. The policy conclusions are that policy makers in Zimbabwe could extend the targeted provision of free health services from rural areas to certain wards in urban areas and to urban female headed households and that existing means tested social benefits should take account of household size and composition when setting the income criteria that determine inclusion in the target group. More generally, use of indicators of human capital poverty, or their correlates, as the criteria for inclusions in the target group offers a viable alternative to means testing social benefits in developing countries and they could therefore be used to increase the effectiveness of targeted poverty alleviation and social safety net policies.