Assessment of the Child Money Program and Properties of its Targeting Methodology

The Mongolian system of social assistance is undergoing a process of transformation. The 2003 sector Master Plan identified the need to improve the targeting of benefits and to rationalize them. As part of this initiative, the Child Money Program (CMP) was launched in 2005. This program incorporated in its design elements that were very innovative, such as the use of proxy means testing for targeting. The CMP was implemented nationally and, within a year, it became the largest social assistance program in the country. The absence of piloting of the program and its operation makes it very relevant to assess its qualities and evaluate those aspects where — both from a design as well as from an implementation perspective — this program could be refined. The main purpose of this document is to contribute to the policy discussion around the CMP. Many have raised concerns that the rapid growth and large coverage of the CMP have implications in terms of its fiscal sustainability. This note explores the targeting of the CMP to assess its potential and actual effectiveness in reaching the poor. This exercise serves multiple objectives: (a) to understand the implications of the design of the current targeting formula in terms of program size and their profile; (b) to open a discussion on how this instrument can be refined to simplify its implementation; and (c) to examine some of the operational aspects of the CMP that could be improved and aligned with the program’s objectives. This note is organized in four parts. It first presents a background description of the institutional setting and the involvement of the World Bank (WB) in the sector. The second section looks at provincial administrative data from the CMP and assesses the current geographic distribution of the program’s coverage. The third part presents simulations that evaluate the properties of the current formula to determine eligibility into the CMP. The last section discusses the main recommendations for reform in terms of the design and implementation of the CMP that could enhance the program’s effectiveness in reaching the poor.