Key message 3 – Failure to reach the poorest is correlated with informality and data quality.
This section analyses the correlation between mistargeting of social assistance schemes, national income, and two key determinants of state capacity: data quality and informality. Figure 6(a) below shows a clear positive relationship between GDP per capita and the proportion of total benefits received by the poorest quintile. Similarly, there is a negative relationship between the proportion of benefits received by the richest quintile and GDP per capita as shown in Figure 6(b).
Figure 6a: How does the wealth of a nation relate to social assistance targeting?
This substantiates Key Message 2 with country-level data that demonstrates that the poorest quintile in lower-income countries receive a smaller share of social assistance, and the richest quintile a larger share, than they do in wealthier countries.
There is also a positive correlation between targeting the poor and the share of formal employment and statistical capacity in a country. Countries with greater data availability and more formality target the poor better. However, only 14% of the difference in targeting across different countries can be explained by these two factors. Further work needs to be done to understand what other factors lead to poorer countries failing to target the poorest.