Does Elite Capture Matter? Local Elites and Targeted Welfare Programs in Indonesia

Abstract

This paper investigates how elite capture affects the welfare gains from targeted government transfer programs in Indonesia, using both a high-stakes field experiment that varied the extent of elite influence and nonexperimental data on a variety of existing government programs. While the relatives of those holding formal leadership positions are more likely to receive benefits in some programs, we argue that the welfare consequences of elite capture appear small: eliminating elite capture entirely would improve the welfare gains from these programs by less than one percent.