Benefit incidence, public spending reforms, and the timing of program capture

Assessments of the distributional effects of public spending reforms have g enerally been based on average rates of program participation by income or expenditure group. This practice can be deceptive because the socioeconomic composition of participants can change as a social program expands or cont racts. The geographic variation found in 1993-94 household survey data for rural India is used to estimate the marginal odds of participating in schoo ling and antipoverty programs. The results suggest early capture of these p rograms by the nonpoor. It is shown that conventional methods for assessing benefit incidence underestimate the gains to the poor from higher public o utlays and underestimate the losses from cuts.