Comparing the poverty-reduction efficiency of targeted versus universal benefits amid crises

Abstract

This study has been prepared within the UNU-WIDER project SOUTHMOD -simulating tax and benefit policies for development Phase 2, which is part of the Domestic Revenue Mobilization programme. The programme is financed through specific contributions by the Norwegian Agency for Development Cooperation (Norad).

Microsimulation of tax-benefit systems in the Global South: a comparative assessment

“…The two social protection reforms we model include a universal basic income and a benefit top-up targeting existing recipients, both fully financed by increases in income tax rates. Our analysis draws from Shahir et al (2023) and Jara and Palacio Ludeña (2024), who use the SOUTHMOD models for Ethiopia and Ecuador, respectively. Both studies evaluate the distributional effects and poverty-reduction efficiency of a set of hypothetical social protection benefits, comparing universal and more targeted approaches.…”