Working Paper: NBER ID: w18798
Authors: Vivi Alatas; Abhijit Banerjee; Rema Hanna; Benjamin A. Olken; Ririn Purnamasari; Matthew Waipoi
Abstract: This paper investigates the impact of elite capture on the allocation of targeted government welfare programs in Indonesia, using both a high-stakes field experiment that varied the extent of elite influence and non-experimental data on a variety of existing government transfer programs. Conditional on their consumption level, there is little evidence that village elites and their relatives are more likely to receive aid programs than non-elites. However, this overall result masks stark differences between different types of elites: those holding formal leadership positions are more likely to receive benefits, while informal leaders are less likely to receive them. We show that capture by formal elites occurs when program benefits are actually distributed to households, and not during the processes of determining who should be on the beneficiary lists. However, while elite capture exists, the welfare losses it creates appear small: since formal elites and their relatives are only 9 percent richer than non-elites, are at most about 8 percentage points more likely to receive benefits than non-elites, and represent at most 15 percent of the population, eliminating elite capture entirely would improve the welfare gains from these programs by less than one percent.
Keywords: elite capture; welfare programs; Indonesia; local leaders; targeted transfer programs
JEL Codes: D73; H53; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| elite capture (Y60) | overall distribution of benefits (D39) |
| better implementation of targeting methods (C52) | welfare improvements (I38) |
| eliminating elite capture (D72) | welfare gains from welfare programs (I38) |
| elite status (formal leaders) (O17) | probability of receiving benefits (H55) |
| elite status (informal leaders) (Z13) | probability of receiving benefits (H55) |