WIDER Working Paper 2015/031 Connections and the allocation of public benefits

as its first research and training centre and started work in Helsinki, Finland in 1985. The Institute undertakes applied research and policy analysis on structural changes affecting the developing and transitional economies, provides a forum for the advocacy of policies leading to robust, equitable and environmentally sustainable growth, and promotes capacity strengthening and training in the field of economic and social policy-making. Work is carried out by staff researchers and visiting scholars in Helsinki and through networks of collaborating scholars and institutions around the world. The views expressed in this publication are those of the author(s). Publication does not imply endorsement by the Institute or the United Nations University, nor by the programme/project sponsors, of any of the views expressed. Abstract: We explore the relationship between connections and public transfers in decentralized poverty-targeting programmes. Using panel data from Vietnam we find evidence that households with connections to local government are more likely to be classified as poor, the main determinant of whether households receive public benefits/supports. Social connections play a role by allowing politically connected households to receive supports without being reprimanded by their local community. We identify provision of information as a mechanism through which households use their connections to obtain the poverty classification, suggesting that information campaigns may be an effective means of eliminating local level corruption in poverty-targeting programmes.