Digital Governance and Targeting Efficiency of Cash Transfer Programs
High targeting bias is a common challenge faced by targeted cash transfer programs,significantly undermin-ing the redistributive effect of cash transfer programs and constituting one of the main obstacles to increasing residents'transfer payments.Investigating the impact and mechanisms of digital governance on the targeting efficiency of cash transfer programs holds significant reference value for increasing residents'transfer payments.The Minimum Living Standard Guarantee(Dibao)is China's primary cash transfer program for low-income groups and the core foundation of China's social assistance system.Housing,education,healthcare,and other specific assistance policies are largely linked to Dibao eligibility.Similar to other targeted cash transfer programs,Dibao has long been troubled by targeting bias.Since 2009,China has promoted the establishment of the"Household Economic Status Verifi-cation System(HESVS)"for low-income families.The HESVS facilitates rapid information exchange between the Dibao management department and other government departments such as tax,social insurance,and real estate registration,as well as financial institutions like banks and securities firms.It improves the accuracy and convenience of verifying the in-come and property status of aid recipients.This paper,based on five rounds of data from the China Household Finance Survey(CHFS)in 2013,2015,2017,2019 and 2021,utilizes the timing differences in the rollout of HESVS at the county level,and employs a time-varying DID ap-proach to study the impact of the implementation of HESVS on the targeting efficiency of the Dibao program.The study finds that the implementation of the HESVS significantly reduces the inclusion error of Dibao,with sub-stantial improvements as the system undergoes upgrades.Four years after the implementation of the HESVS,the inclu-sion error of Dibao was reduced by 15.3％-17.7％.Preliminary estimates show that the HESVS significantly outweighs its construction costs in terms of cost-effectiveness by reducing the surplus of incorrectly allocated Dibao funds.Mecha-nism analysis indicates that the HESVS enhances targeting effectiveness by reducing the cost of audit work,improving the quality of verification,and increasing the fairness of the eligibility determination process.The effect of reducing er-rors in coverage is more pronounced in rural areas,especially in remote communities with strong clan power and a high proportion of out-migration.The integration of pension information into the HESVS has significantly enhanced its effec-tiveness in reducing the inclusion error among elderly households.Moreover,although the HESVS has helped disqualify a large number of households incorrectly receiving Dibao,it has not led to an increase in social conflicts caused by dis-qualification.However,the system has not fully utilized its potential in reducing exclusion error.The findings suggest that tapping into the potential of digital governance in the social security sector has substantial potential to enhance the level of social protection and improve the public transfer payment system.This paper contributes to the literature in following ways:it provides direct evidence on how digital governance can enhance the targeting efficiency of government transfer programs;it expands the digital governance literature within so-cial security,addressing the overlooked impact of digital technology on targeting efficiency;and it discusses the feasibil-ity of improving transfer payments and protection levels through digital governance,a perspective less explored in previ-ous studies focusing on institutional and financial solutions.
Digital GovernanceTransfer PaymentTargeting EfficiencyRedistribution
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