Cash Transfers and Poverty Reduction in Chile*

The headcount ratio in Chile has declined from 40 percent to 14 percent since 1987. However, most analysis of this reduction uses national and regional poverty statistics. In contrast, we employ poverty mapping methodologies to find heterogeneity in the effectiveness of transfers across counties. To better understand this variation, we explore the roles of characteristics of the local population, structural features of the county, and geography. The greatest reductions in poverty occur in rural households, yet population characteristics and geography are also important. These findings suggest that targeting at low levels of aggregation can deliver further reductions in poverty.