which may lead to only part of the wage outlays being effective in reducing poverty. Finally, public works may entail substantial costs both in terms of administration and materials.

The experience with public works in Africa is mixed, and much of the published research deals with middle income countries such as Botswana and South Africa. Haddad and Adato (2002) find that among a sample of public works projects in South Africa, about 90% outperformed an untargeted transfer scheme, but among community-based programs, performance was lower (Adato and Haddad 2002). Teklu and Asefa (1997, 1999) find that in rural Botswana and Kenya, public works have had a substantial positive impact on the income of the poor, and that the poor are more likely to participate in the schemes than the non-poor. Nevertheless, a substantial number of non-poor individuals also participate in the schemes, so that targeting performance could be improved.

Using data from Chad, Ghana, Liberia, and Rwanda and simple simulation techniques, Wodon et al (2008c) provide some further empirical evidence on these issues and on the importance to complement selftargeting with geographic targeting. The authors first assess who may be potentially interested in participating in a public works program by identifying working individuals in the household survey without pay, as well as for every level of proposed wage in the public works program, those individuals who work but now earn less than the public works wage. The assumption is that all these individuals may be interested in participating in the program to increase their earnings. They also consider as potential beneficiaries the unemployed whose reservation wage (the wage that they would like to get in order to work) is below the proposed public works wage. Next, they randomly select a number of participants from among the pool of potential beneficiaries of the public works program so as to match a certain number of program participants. Finally, they estimate for the assumed participants to the program two key parameters which affect the potential impact of the program on the poor: the targeting performance of the program, and the substitution effect of the program, whereby only part of the wages paid to beneficiaries generate additional income, because at least some of the beneficiaries would probably have done other work if they had not participated in the program.

The authors define the overall leakage rate as the share of program outlays that are likely not to raise the incomes of the poor, either because program participants are not poor, or because there is a substitution effect whereby some of the wages earned in labor intensive public works program are lost due to the fact that program participants must give up other work to participate in the programs. When national public works programs are implemented, the leakage rates are very high, varying from 50% to close to 75% in all four countries. Reducing the public works wage helps in reducing leakage rates, though by a small amount only. By contrast, if the programs are geographically targeted, targeting performance can improve substantially. In Ghana for example, while at the national level, the leakage rate is very high, at 73.2%, it could be as low as 17.9% in the Upper West region of the country.