A Review of the Targeting System in Georgia : Proposed Reform Options
This paper first reviews the performance of the current targeting system and recommends improvements to the existing PMT formula. One implementation issue we identified is the inconsistency in how monetary and nonmonetary values are treated when ca...
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/584461593145535348/Caucasus-Social-Protection-and-Jobs-TA-A-Review-of-the-Targeting-System-in-Georgia-Proposed-Reform-Options http://hdl.handle.net/10986/34089 |
| Summary: | This paper first reviews the performance
of the current targeting system and recommends improvements
to the existing PMT formula. One implementation issue we
identified is the inconsistency in how monetary and
nonmonetary values are treated when calculating the PMT
score. The practice has been to calculate the score based on
monetary variables (income, social benefits package, and
utility expenditures) at current nominal prices, which have
inevitably inflated the predicted consumption. As the PMT
formula was estimated at 2013 prices, the recommendation to
correctly implement the current PMT formula would be to
deflate all monetary variables to 2013 prices. Second, to
further improve the poverty targeting accuracy, the paper
presents the updated PMT model estimation and discusses the
benefits and cost of transitioning to the new PMT formula.
The empirical analysis is based on the 2018 HIES collected
by the National Statistics Office of Georgia (Geostat), the
latest available to the team at the time of the analysis.
The remainder of this note is organized as follows. Section
two looks at the performance of the current PMT model to
identify key areas of possible improvements. Section three
develops alternative estimates and proposes a new PMT
formula, comparing its theoretical performance with that of
the current one. This is followed by a discussion of the
implementation of the formula in the following years to
avoid problems encountered with the current approach.
Section four goes further to make a more radical proposal to
consider moving to an ‘hybrid’ approach combining an income
test with the PMT, highlighting the advantages of the
approach and the steps needed for its development and
implementation. A final section provides a summary of key
recommendations for the immediate, short, and medium term. |
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