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Abstract
This paper reviews the literature on the performance of commonly found social
safety net programs in developing countries. The evidence suggests that universal food
subsidies have very limited potential for redistributing income. While targeted food
subsidies have greater potential, this can only be realized when adequate attention is
given to the design and implementation, as well as to the social and political factors
influencing the adoption, of these programs. Although well-designed public works
programs have impressive targeting performance, they have large non-wage costs; thus,
to be cost-effective, they need to produce outputs that are especially beneficial to poor
households. Social funds, which emphasize both community involvement and asset
creation, have been cost-effective, but they are difficult to target to extremely poor
households. Traditional public works programs are particularly attractive for addressing
vulnerability, but they require flexibility regarding choice of output. Targeted human capital
subsidies appear to have great potential for addressing extreme poverty; but again,
their design needs to reflect the human capital profile of countries and the administrative
capability of the government.