Abstract
The Egyptian food subsidy system is untargeted. Its impact on the welfare of the poor has been questioned. Using 1997 survey data, this paper shows that the Egyptian food subsidy system is self-targeted to the poor, because it subsidizes “inferior” goods. In urban Egypt, the main subsidized food - baladi bread - is consumed more by the poor than the rich. However, in rural Egypt where the poor eat less baladi bread, the poor do not benefit as much. For this reason, administrative targeting of food subsidies in Egypt could improve the welfare of the poor more efficiently than the present system.
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