What is the optimal locus of control for social assistance programs? Evidence from the Productive Safety Net Program in Ethiopia

Abstract

Do poverty outcomes improve when the implementation of social assistance programs is decentralized? The centralized implementation mandates of Ethiopia's Productive Safety Net Program require a full and uniform payment to each eligible person. In practice, however, communities do not receive enough funding to fully implement the program. Therefore, communities must exercise local discretion in allocating aid. I recover the preferences revealed by local communities' aid allocations and find they are pro-poor, allocating more to underprivileged groups with lower-wage earning potential (e.g., teenage girls vs. teenage boys, adult women vs. adult men, elderly vs. working-age adults). Despite communities' pro-poor implementation, the program with constrained funding does not significantly lower overall poverty rates. In simulations at full funding levels, the program reduces poverty with both centralized and decentralized allocation criteria. The financial scale of the safety net program is more important to poverty reduction than the locus of control over implementation.