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Debunking the Stereotype of the Lazy Welfare Recipient: Evidence from Cash Transfer Programs Worldwide
Abstract
Targeted transfer programs for poor citizens have become increasingly common in the developing world. Yet, a common concern among policy makers - both in developing as well as developed countries - is that such programs tend to discourage work. We re-analyze the data from 7 randomized controlled trials of government-run cash transfer programs in six developing countries throughout the world, and find no systematic evidence that cash transfer programs discourage work.
... Despite these benefits, many policymakers express concern that these programmes may create disincentives to work. In fact, these beliefs are correlated with less extensive and generous programmes (Banerjee et al., 2017). The underlying economic theory is, however, ambiguous. ...
... Empirically, the predictions of this model are very seldom seen. Largely, the empirical literature does not support a negative labour supply effect (Baird et al., 2018;Banerjee et al., 2017;Handa et al., 2018). Instead, null or positive effects are often found (Alzúa et al., 2013;Bandiera et al., 2017;Salehi-Isfahani & Mostafavi-Dehzooei, 2018). ...
... Instead, null or positive effects are often found (Alzúa et al., 2013;Bandiera et al., 2017;Salehi-Isfahani & Mostafavi-Dehzooei, 2018). This suggests that both the sign and magnitude of effects may be driven by two specific factors: the details of the programme design and the underlying economic conditions (Banerjee et al., 2017;Millán et al., 2019). This paper considers the case where both of these factors are explicitly characterised by unemployment. ...
This paper considers the labour market effects of an unconditional cash transfer targeted at the unemployed in a context of extreme unemployment. Using a staggered, heterogeneity-robust difference-in-differences design applied to panel labour force survey data, we estimate the contemporaneous and dynamic effects of a new transfer introduced in South Africa, the Social Relief of Distress grant, the first labour market-linked transfer in the country’s history. We find that, on average, receipt has positive effects on the probabilities of job search, trying to start a business, and employment. The latter effects are driven by effects on wage and informal sector employment. We show that employment effects are positive for the unemployed who are either actively searching for work or trying to start a business, as well as for those who are not, but they are substantially larger for the former. This indicates that the transfer both encourages and improves the efficiency of labour market activity by addressing labour market constraints, but highlights the importance of active labour market engagement for improving employment prospects through the transfer. However, these employment effects are non-linear, in that they are evident in the short-term but quickly become and remain null in the longer-term. These results suggest that cash transfers can help reduce labour market constraints but such gains need not translate into better longer-term employment prospects in high-unemployment contexts.
... Despite these benefits, many policymakers and members of the public express concern that these programmes may create disincentives to work and a culture of dependency. In fact, these beliefs are correlated with less extensive and generous social assistance programmes (Banerjee et al., 2017). The underlying economic theory is, however, ambiguous. ...
... Empirically, the predictions of the standard model are very seldom seen. For the most part, the empirical literature does not support a negative labour supply effect (Banerjee et al., 2017;Baird et al., 2018;Handa et al., 2018), and in several cases positive effects are instead found (Alzúa et al., 2013;Bandiera et al., 2017;Salehi-Isfahani & Mostafavi-Dehzooei, 2018). This ultimately, increase unemployment (Hollander et al., 2024). ...
... Our analysis makes several contributions to existing literatures and holds important policy implications. First, it contributes to the large empirical literature on the labour market effects of cash transfers in low-and middle-income countries (Rose, 2001;Serra et al., 2006;Gertler et al., 2012;Banerjee et al., 2017;Ervin et al., 2017;Salehi-Isfahani & Mostafavi-Dehzooei, 2018;Bastagli et al., 2019). Our findings are consistent with most studies which do not support a negative labour supply effect as predicted by the standard theoretical model. ...
This paper considers the labour market effects of an unconditional cash transfer targeted at the unemployed in a context of extreme unemployment. Using a staggered, heterogeneity-robust difference-indifferences design applied to panel labour force survey data, we estimate the contemporaneous and dynamic effects of a new transfer introduced in South Africa, the Social Relief of Distress grant, the first labour market-linked transfer in the country's history. We find that, on aggregate, receipt has positive effects on the probabilities of job search, trying to start a business, and employment. The latter effects are driven by effects on wage and informal sector employment. We show that employment effects are positive for the unemployed who are either actively searching for work or trying to start a business, as well as for those who are not, but they are substantially larger for the former. This indicates that the transfer both encourages and improves the efficiency of labour market activity by addressing labour market constraints, but highlights the importance of active labour market engagement for improving employment prospects through the transfer. However, these employment effects are only evident in the short-term and quickly become and remain null in the longer-term. These results suggest that cash transfers can help reduce labour market constraints but such gains need not translate into better longer-term employment prospects in high-unemployment contexts.
... This finding suggests that the COVID-19 grant has played an important role in reducing labour market inactivity and enabling participation -ultimately aiding the recovery of the labour market. Our findings are thus contrary to the common concern that social grant programs may discourage work, in line with the empirical literature in developing countries (Banerjee et al., 2017), developed countries (Marinescu, 2018), and South Africa for other existing grants (Woolard et al., 2011). These findings have clear implications for policymaking going forward. ...
... An analysis on the effects of such receipt, particularly on labour market outcomes, may be of particular importance to policymakers, given that it relates to a common concern that social grant programs may discourage work. Although there is little to no systemic evidence that such programs discourage work amongst the working-aged in developing countries (Banerjee et al., 2017), developed countries (Marinescu, 2018), and South Africa for other existing grants (Woolard et al., 2011), it is plausible to believe the effects of the COVID-19 grant may differ because it is the first grant in South Africa to target the unemployed. In this section, we describe our identification strategy to estimate the causal effect of COVID-19 grant receipt on labour market outcomes by employing a quasiexperimental econometric technique on observational household survey data, outlined in more detail below. ...
... Our results suggest that the COVID-19 grant has played an important role in reducing labour market inactivity and increasing participation -ultimately aiding the recovery of the South African labour market. Our findings are also contrary to the common concern that social grant programs may discourage work, in line with the empirical literature in developing countries (Banerjee et al., 2017), developed countries (Marinescu, 2018), and South Africa for other existing grants (Woolard et al., 2011). ...
As part of the South African government’s response to the adverse economic effects of the COVID-19 pandemic, the country’s system of social assistance was temporarily expanded. On the extensive margin, a special COVID-19 grant was introduced to provide support to a large, previously unreached group – unemployed adults – and therefore address a notable hole in the social safety net. Given the grant’s distinct target group, it is plausible that its labour market effects may vary from those of pre- existing grants. In this paper, we provide a quantitative, descriptive analysis on COVID-19 grant receipt as well as causal estimates of the receipt of the grant on labour market participation by adopting a quasi-experimental econometric approach. First, we find that not only did the grant bring millions of previously unreached adults into the system, but application for and receipt of the grant was relatively pro-poor, and it was relatively well-targeted to the unemployed. We estimate that in the grant’s absence poverty would have been over 5% higher among the poorest households, and household income inequality 1.3% to 6.3% higher. Second, contrary to the common concern that grant programs may discourage work, our preferred causal estimate suggests that COVID-19 grant receipt increased the probability of job search by more than 25 percentage points. This highlights the grant’s important role in reducing inactivity, enabling participation, and ultimately aiding labour market recovery.
... Unlike in some comparable programs, no consumption stipend is provided. Being less comprehensive and shorter in duration, the Village Enterprise program comes at roughly a third of the cost (in USD PPP terms) of the least costly graduation program included in the metastudy of Banerjee et al. (2015Banerjee et al. ( , 2017b. 2 ...
... Consistent with Banerjee et al. (2015Banerjee et al. ( , 2017b, Bandiera et al. (2017), andBlattman et al. (2016), we found that an integrated microenterprise program targeting people in extreme poverty increased entrepreneurial activity and reduced poverty. Impacts on key economic outcomes appear significant, robust to multiple inference adjustments, and supported by consistent signals on subjective well-being and nutrition. ...
... Consistent with Banerjee et al. (2017b) we do not find that cash transfers reduced labor market participationon the contrary. That said, the estimated economic impacts of the pure cash transfers were very muted. ...
Can training and mentorship expand the economic impact of cash transfer programs, or would such extensions waste resources that recipients could allocate more impactfully by themselves? Over the course of two years, a Ugandan nonprofit organization implemented alternative poverty alleviation approaches in a randomized manner. These included an integrated graduation-style program involving cash transfers as well as extensive training and mentorship; a slightly simplified variant excluding training on savings group formation; and a radically simplified approach that monetized all intangibles and delivered cash only. Light-touch behavioral extensions involving goal-setting and plan-making were also implemented with some cash transfer recipients. We find that simplifying the integrated program tended to erode its impact.
... Lacking knowledge about preexistent local power relations and the ignorance of local capabilities have thus thwarted many well-meant development projects as research with some postcolonial perspectives uncovered (Mohan 2006;Sen 2009;Ostrom 2009;Kanneh 1999;Norton 1998). To foster the ideas of sustainable development and the SDG 1 to "end poverty in all its forms, everywhere," there are alternative approaches and instruments emerging (Banerjee et al. 2015). For instance, there is a global discussion about new forms of poverty alleviation like a universal basic income (UBI) as a form of direct development aid (Bankerjee et al. 2015). ...
... Through a mobile money service that is widely used in Africa (due to unreliable bank transfers or bank accounts), the chosen communities receive, for instance, $ 0.75 per day and adult. Starting in 2018 this project has already shown positive effects on the living conditions of the chosen villages compared to those that are not included in this project (ibid., Banerjee et al. 2015). For its self-empowering character, the UBI and other direct approaches on poverty and inequality reduction are in this entry considered as alternative tools for empowerment of the poor and vulnerable as they support people's active scope of action and thereby empower them to make own decisions and preferred choices, which is at the heart of any empowerment definition. ...
... Our study is related to the literature that has examined the impact of cash transfers programmes on labour supply, esepcially for adult workers (see, e.g., Alzúa et al., 2013;Ardington et al., 2009;Banerjee et al., 2017;Daidone et al., 2014;Salehi-Isfahani & Mostafavi-Dehzooei, 2018). The findings from this literature remain mixed. ...
... The findings from this literature remain mixed. For instance, drawing on evidence from seven cash transfer programmes across six countries, Banerjee et al. (2017) show that transfer programmes do not reduce work incentives or discourage work. Similar evidence is reported in the case of Iran by Salehi-Isfahani and Mostafavi-Dehzooei (2018). ...
We examine the impact of unconditional cash transfers (UCTs) on child labour and educational outcomes. We first develop a simple theoretical model where we explore how government transfers financed by labour income taxation affect household decisions on child labour and education. We then empirically examine the impact of Pakistan’s Benazir Income Support Programme (BISP), which is the largest cash transfer program in South Asia, on child labour and school outcomes. We employ a regression discontinuity design (RDD) to estimate the average effect of the UCTs on child labour and school outcomes, and find that UCTs have a positive and statistically significant impact on school enrolment and grade promotion, but no impact on school dropout rates in the short run. The BISP policy intervention increases grade promotion among boys but not among girls. In the short run, the BISP substantially reduces dropout for boys but increases substantially for girls. With regards to child labour, we find that the BISP policy intervention has no impact on child labour in the short run; but in the medium to long run, cash transfers help to reduce child labour among boys as well as girls. In the short run, however, the BISP increases child labour among girls but not boys. These findings are largely consistent with our theoretical predictions and also robust to a series of robustness and sensitivity checks.
... Lacking knowledge about preexistent local power relations and the ignorance of local capabilities have thus thwarted many well-meant development projects as research with some postcolonial perspectives uncovered (Mohan 2006;Sen 2009;Ostrom 2009;Kanneh 1999;Norton 1998). To foster the ideas of sustainable development and the SDG 1 to "end poverty in all its forms, everywhere," there are alternative approaches and instruments emerging (Banerjee et al. 2015). For instance, there is a global discussion about new forms of poverty alleviation like a universal basic income (UBI) as a form of direct development aid (Bankerjee et al. 2015). ...
... Through a mobile money service that is widely used in Africa (due to unreliable bank transfers or bank accounts), the chosen communities receive, for instance, $ 0.75 per day and adult. Starting in 2018 this project has already shown positive effects on the living conditions of the chosen villages compared to those that are not included in this project (ibid., Banerjee et al. 2015). For its self-empowering character, the UBI and other direct approaches on poverty and inequality reduction are in this entry considered as alternative tools for empowerment of the poor and vulnerable as they support people's active scope of action and thereby empower them to make own decisions and preferred choices, which is at the heart of any empowerment definition. ...
... Where a reduction in work is observed, it is in relation to reductions in casual wage labour among those of working age, in paid work by women with care responsibilities and, in the case of social pensions provided to the elderly, an associated reduction in the elderly working for pay (e.g. Baird et al., 2018;Banerjee et al., 2015;Bastagli et al., 2016;Bosch and Manacorda, 2012;Owusu-Addo et al., 2018) Bastagli et al. (2016) review the evidence spanning 15 years, 2000-2015, from 165 LICs and MICs and find that cash transfers (non-contributory, targeted) have either no effect or a positive effect on adult labour force participation. Out of eight studies reporting on cash transfer impact on work participation for adults of working age, four found statistically significant impacts, three being increases and one a decrease. ...
... vii Similar findings emerge from other recent reviews. Banerjee et al (2015) analyse data from 7 randomised controlled trials of government cash transfer programmes (non-contributory, targeted). Across the seven programmes reviewed (based on results from 21 studies, covering 17 conditional or unconditional cash transfers programmes that do not have explicit work requirements to the poor in six countries), they find no systematic evidence that cash transfer programmes discourage work; they find no observable impacts of cash transfer programmes on either the propensity to work or the overall number of hours worker, for either men or women. ...
... Our study is related to the literature that has examined the impact of cash transfers programmes on labour supply (see, e.g., Alzúa et al., 2013;Ardington et al., 2009;Banerjee et al., 2017;Daidone et al., 2014;Salehi-Isfahani & Mostafavi-Dehzooei, 2018). The findings from this literature remain mixed. ...
... The findings from this literature remain mixed. For instance, drawing on evidence from seven cash transfer programmes across six countries, Banerjee et al. (2017) show that transfer programmes do not reduce work incentives or discourage work. Similar evidence is reported in the case of Iran by Salehi-Isfahani and Mostafavi-Dehzooei (2018). ...
We examine the impact of unconditional cash transfers (UCTs) on child labour and educational outcomes. We first develop a simple theoretical model where we explore how government transfers financed by labour income taxation affect household decisions on child labour and education. We then empirically examine the impact of Pakistan's Benazir Income Support Programme (BISP), which is the largest cash transfer program in South Asia, on child labour and school outcomes. We employ a regression discontinuity design (RDD) to estimate the average effect of the UCTs on child labour and school outcomes, and find that UCTs have a positive and statistically significant impact on enrolment and grade promotion, but no impact on school dropout rates in the short run. The BISP intervention increases grade promotion among boys but not among girls. With regards to child labour, we find that the BISP intervention has no impact on child labour in the short run; but in the medium to long run, cash transfers help to reduce child labour among boys as well as girls. These findings are consistent with our theoretical predictions and also robust to a series of robustness and sensitivity checks.
... Where a reduction in work is observed, it is in relation to reductions in casual wage labour among those of working age, in paid work by women with care responsibilities and, in the case of social pensions provided to the elderly, an associated reduction in the elderly working for pay (e.g. Baird et al., 2018;Banerjee et al., 2015;Bastagli et al., 2016;Bosch and Manacorda, 2012;Owusu-Addo et al., 2018) Bastagli et al. (2016) review the evidence spanning 15 years, 2000-2015, from 165 LICs and MICs and find that cash transfers (non-contributory, targeted) have either no effect or a positive effect on adult labour force participation. Out of eight studies reporting on cash transfer impact on work participation for adults of working age, four found statistically significant impacts, three being increases and one a decrease. ...
... vii Similar findings emerge from other recent reviews. Banerjee et al (2015) analyse data from 7 randomised controlled trials of government cash transfer programmes (non-contributory, targeted). Across the seven programmes reviewed (based on results from 21 studies, covering 17 conditional or unconditional cash transfers programmes that do not have explicit work requirements to the poor in six countries), they find no systematic evidence that cash transfer programmes discourage work; they find no observable impacts of cash transfer programmes on either the propensity to work or the overall number of hours worker, for either men or women. ...
The universal and unconditional nature of a basic income raises questions about how such schemes affect work incentives and the type and quality of work undertaken. Against the backdrop of current trends in the world of work (including the rise in non-standard employment and work insecurity, high informality, the threat of technological unemployment and the persistent unequal distribution of unpaid work), and growing concerns that the economy and existing welfare policies are failing to deliver for parts of the population, this paper examines the role of basic income schemes in influencing four work-related outcomes:
• participation in paid work and financial work incentives;
• conditions of paid work;
• the valuation and distribution of unpaid work; and
• formal and informal work.
... Alzúa, Cruces, and Ripani (2013) evaluated three randomized control evaluations conducted by the World Bank and the United Nations in the Honduras, Mexico, and Nicaragua. This work was later extended to include a set of seven randomized controlled studies in an unpublished white paper by Banerjee, Hanna, Kreindler, and Olken (2015) with neither paper finding notable impacts of cash transfer programs on either the propensity to work or the overall hours worked. ...
... Amount and Benchmarking of the Income GuaranteeNote: Transfer/Consumption data is as reported according toBanerjee et al. (2015). ...
Many opponents of BIG programs believe that receiving guaranteed subsistence income would act as a strong disincentive to work. In contrast, various areas of empirical research in psychology (studies of intrinsic motivation; non-pecuniary benefits of work on social identity and purpose; and reactions to financial windfalls such as lottery winnings) suggest that a BIG would not lead to meaningful reductions in work. To test these competing predictions, a comprehensive review of BIG outcome studies reporting data on adult labor responses was conducted. The results indicate that 93 % of reported outcomes support the prediction of no meaningful work reductions when the criterion for support is set at less than a 5 % decrease in either average hours worked per week or the rate of labor participation. Overall, these results indicate that adult labor responses would show no substantial impact following a BIG intervention.
... These challenges created opportunities for unconditional (universal) policies, which, due to their inclusive nature and faster implementation, emerged as a critical alternative during the crisis. Unlike conditional assistance, which is often burdened by eligibility assessments and distribution delays, unconditional assistance can be quickly deployed to a broad segment of the population, providing immediate relief and ensuring coverage across diverse demographics (Gentilini et al., 2022;Banerjee et al., 2017;Bastagli et al., 2016). This shift raises a central question: Given different levels of crisis severity, which form of social assistance-conditional or unconditional-is optimal in addressing the needs of the population? ...
The COVID-19 pandemic highlighted significant challenges in designing social assistance strategies for crisis management. This study investigates optimal approaches using theoretical modeling and multinomial logit analysis of data from 47 countries during the pre-vaccination phase of 2020. The findings underscore the importance of combining conditional (targeted) and unconditional (universal) social assistance measures, with unconditional assistance prioritized in severe crises due to its rapid implementation and broad reach. By addressing the complexities of resource allocation and policy implementation under crisis conditions, this study provides actionable insights for public policy design, emphasizing the need for robust budgetary systems to sustain multifaceted strategies, mitigate immediate impacts, and build resilience against future disruptions.
... Outro importante ponto de críticas às transferências de renda está atrelado ao estigma feito sob a suposição de que os beneficiários venham a destinar os recursos para finalidades inapropriadas como compra de bebidas alcoólicas ou outros tipos de bens supérfluos, porém Evans e Popova (2014) colacionam vastas comprovações que encontram nenhum impacto significativo ou impacto negativo significativo para estudos realizados na América Latina, África e Ásia. Um outro aspecto relevante levantado no debate acerca das descrenças sobre a RBU, refere-se aos seus possíveis efeitos nocivos sobre a oferta de trabalho, isto é, o estereótipo de que beneficiários de transferências de renda podem se tornar preguiçosos; no entanto, não é o que a evidência levantada em Banerjee et al. (2017) confirma, pelo contrário, as comprovações em países desenvolvidos e em desenvolvimento não atribuem relação entre programas de transferência de renda e desincentivo ao trabalho. ...
This study evaluates the impact of a Universal Basic Income (UBI) on income distribution and the productive structure of the Brazilian economy, using an input-output matrix based on the 2019 Supply and Use Tables. The model examines the introduction of a R$ 422 transfer combined with an income tax reform, simulating an exogenous shock to the economy. The proposed policy redistributes income from higher-income to lower-income groups, increasing the share of the bottom five deciles in total income and boosting consumption in sectors such as food and retail. With a cost equivalent to 11% of GDP, the UBI leads to an 8% increase in income, a 10% rise in production, and an 11% growth in employment, particularly benefiting labor-intensive activities like domestic services, retail, transportation, and construction. Although the distribution of newly generated income still favors higher-income groups, the UBI reduces economic disparities. The policy has minimal effect on the productive structure, preserving sectoral relationships, but it does alter the distribution of income between capital and labor. This underscores the need to complement the UBI with incentives to reshape Brazil's productive dynamics for greater equity and economic efficiency.
... In this literature, a conditional cash transfer is a recurring grant paid to an eligible household that is explicitly linked to a child attending school or other household decisions the policy maker wants to encourage, with transfer amounts of the order of 5-20 percent of average household consumption in the target population. In 1998-99 the government of Mexico conducted a large-scale randomized trial during the roll-out of the PROGRESA/OPORTUNIDADES program (Schultz (2004) and Todd and Wolpin (2006)), and similar programs have subsequently been implemented in over 50 other countries (see Banerjee, Hanna, Kreindler, and Olken (2017) for a recent summary). 5.1. ...
We consider the problem of extrapolating treatment effects across heterogeneous populations (``sites"/``contexts"). We consider an idealized scenario in which the researcher observes cross-sectional data for a large number of units across several ``experimental" sites in which an intervention has already been implemented to a new ``target" site for which a baseline survey of unit-specific, pre-treatment outcomes and relevant attributes is available. We propose a transfer estimator that exploits cross-sectional variation between individuals and sites to predict treatment outcomes using baseline outcome data for the target location. We consider the problem of obtaining a predictor of conditional average treatment effects at the target site that is MSE optimal within a certain class and subject to data constraints. Our approach is design-based in the sense that the performance of the predictor is evaluated given the specific, finite selection of experimental and target sites. Our approach is nonparametric, and our formal results concern the construction of an optimal basis of predictors as well as convergence rates for the estimated conditional average treatment effect relative to the constrained-optimal population predictor for the target site. We illustrate our approach using a combined data set of five multi-site randomized controlled trials (RCTs) to evaluate the effect of conditional cash transfers on school attendance.
... Vale lembrar que a coexistência de auxílios sociais e mercado de trabalho tem atraído atenção da literatura especializada. Em específico, a literatura questiona se os programas de transferência de renda tendem a distorcer os incentivos de uma parcela expressiva da população, desestimulando-a a procurar uma ocupação formal (Banerjee et al., 2017); ou se podem reduzir os custos de se encontrar uma melhor alocação no mercado formal, o que também seria estimulado via fatores multiplicadores gerados pela transferência de renda para as economias locais (Egger et al., 2019). Em resumo, o teste de hipóteses é: a transferência de renda prejudica o mercado de trabalho formal versus a transferência de renda estimula o mercado de trabalho formal. ...
Esta nota demonstra que o Programa Auxílio Brasil está ampliando consideravelmente a rede de proteção social brasileira e o estabelecimento do valor mínimo para o benefício em R$ 400 vem protegendo os beneficiários das perdas de renda registradas em virtude da crise sanitária.
... (Bakst & Butcher, 2021, paragraph 9) Yet these concerns of entitlement are largely unfounded. Reliance on social safety net programs, such as SNAP, WIC, and the school meals programs have not been shown to keep families in poverty or diminish parental participation in the workforce (see Banerjee et al., 2017). In fact, exposure to social safety net programs in childhood improves a host of adult outcomes (Bailey et al., 2020;Hinrichs, 2010), while investments in early childhood wellbeing offer substantial economic returns to society from increased wages, reduced participation in the criminal justice system, and other cost savings (Heckman, 2011;Hoynes & Schanzenbach, 2018). ...
Traditional federal school meals help mitigate food insecurity among students (Hinrichs, 2010) but do not fully eliminate it. The Community Eligibility Provision (CEP) is a federal attempt to expand access to school meals in areas of targeted need. Schools that opt into CEP offer meals at no cost to all students regardless of individual need, thus replacing free and reduced-price meal applications. However, by virtue of the funding design, schools with lower levels of documented poverty are financially disincentivized from participating in CEP and despite promising benefits, many of these schools do not take up the program. Importantly, even though these schools demonstrate “lower” need, their needs may still be persistent and severe as qualification standards may under-diagnose poverty, especially in specific communities. I conduct a three-part analysis of CEP. Part one is a systematic review of existing CEP literature. CEP has shown promise in initial research to benefit students with positive outcomes on student participation in meal programs, improved nutrition quality, improved test scores, and improved attendance and taken cumulatively, indicate a reduction in anti-poverty stigma. In part two, I conduct a novel analysis of schools that opt into CEP before subsequently opting out. I find that students miss more school when CEP is taken away, an effect driven largely by students who are economically disadvantaged. In part three, I analyze the economic implications of policy proposals that expand or contract CEP. Results indicate that CEP could be expanded to provide access to nearly 20 million more students with a net federal school meal expenditure change of between 11-15.3%. Taken together, CEP is a program that benefits economically disadvantaged students in spite of a sliding scale finance schedule that disadvantages schools. Policy changes that would improve this sliding scale feature are reasonably feasible and would impact millions of economically disadvantaged students. These analyses are timely, given recent interest in the expansion of CEP and have the potential to contribute to important conversations on the future of federal school meal policy.
... When subsistence considerations are important, poor individuals will work very hard regardless of any UBI transfer, given that the transfer is not large enough in size. This hypothesis is supported empirically by Banerjee et al. (2017), leading to the conclusion that labor market disincentives arising from a UBI scheme is a greater problem in developing countries than in developed countries. ...
... However, ever since the Electronic copy available at: https://ssrn.com/abstract=4124402 introduction of such policies, one of the key arguments against them has been if the household or beneficiaries will misuse the benefits Devereux, 2002;Evans et al., 2017;Banerjee et al., 2017). ...
Globally, democratic and welfare-oriented governments resort to affirmative action to bridge the equity gap arising from various historic and structural exclusions (race, color, gender, caste, socio-economic status, sexuality, nationality or historical discrimination). Affirmative action is required to improve equality of opportunity in different fields such as health, education, agriculture, economic development and transportation. There are two contrasting views with regards to impact of affirmative action at household level. The first view is that it leads to increased effort by beneficiaries i.e., a beneficiary further complements the efforts of government by investing additional effort or resources (complementarity). However, the second view claims that affirmative actions make beneficiaries complacent, and instead of increased effort there is a tendency to relax and offset their own efforts. Some critics have even extended the argument that affirmative action is counterproductive in that investments are wasted on gambling, alcohol, or other temptation goods. Here in this study we present evidence from one such affirmative action policy in the field of education in Uttar Pradesh. The section 12.1.c of the Right to Education Act 2009 in India mandates private schools to reserve 25 percent of their entry level seats (pre-primary or class I) for children from disadvantaged groups or economically weaker sections. By taking stratified random samples of winners and non- winners of RTE 12.1.c lottery applicants and analyzing their household level data, this study finds that affirmative action leads to complementarity of efforts by parents as opposed to complacency or reduced efforts. This study has wide ranging implications for the policies on affirmative action in India.
... Three of eleven studies reporting on effects at the intensive margin find negative effects. The same lack of effects was observed in the meta-analysis of seven randomized controlled trials (RCTs) of cash transfers performed by Banerjee et al. (2017). Looking for effects both at the extensive and intensive margins, the authors conclude that "This paper does not observe a significant effect of belonging to a transfer program on employment or hours of work in any of the seven programs". ...
... In fact, impact evaluations of cash transfers in sub-Saharan africa do not indicate a reduction in work effort by recipients but, instead, increased autonomy and flexibility over productive activities-recipients often choose to work on their own farms instead of doing casual agricultural wage labour (Handa et al., 2018). Similar results have been found across the global South (alzua et al., 2013;Banerjee et al., 2017;Surender et al., 2010). Nonetheless, this perception persists and is one of the main reasons why some governments resist extending social assistance to working-age populations. ...
Experience with urban social protection programmes is relatively limited in the Global South. Extensions or duplicates of rural social assistance programmes do not reflect the distinct vulnerabilities of the urban poor, who face higher living costs and more precarious employment, and are not reached by social insurance schemes that are designed for formally employed workers. Neither the Sustainable Development Goals nor the New Urban Agenda reflect a specific focus on urban social protection. COVID-19 has exposed this major gap in coverage, given the disproportionate impact of lockdowns on the livelihoods of the urban poor. To ‘build back better’ post COVID-19, we propose rights-based national social protection systems with two components: categorical social assistance for non-working vulnerable groups (children, older persons, persons with disability) and universal social insurance for all working adults (formal, informal or self-employed), financed out of general revenues rather than mandatory contributions by employees and employers. These ideas are explored in the case of South Africa, which has comprehensive social assistance but inadequate social insurance for urban informal workers.
... There is a large and robust body of literature across different geographical regions and program typologies showing that, in general, CTs have significant positive impacts on a range of household-level economic-security outcomes, including poverty rates, food security, household expenditure and consumption, household durable and productive assets, income-generation and labor-force participation, and savings and investments (Hidrobo et al. 2014;Bastagli et al. 2016;Natali et al. 2016;Banerjee et al. 2017;Handa et al. 2017;Handa et al. 2018;Hidrobo et al. 2018). Further, there is a growing body of literature documenting the positive local economy impacts of CTs, implying positive spillovers on non-beneficiary households in terms of economic outcomes (Taylor, Thome, and Filipski 2016). ...
... Our results add to a variety of other studies that have come to similar conclusions: cash transfers in resource-poor settings have not been found to reduce the labor supply of beneficiary households in a meaningful way. For example, Banerjee et al. (2017) examined large-scale (primarily conditional) cash transfers from six countries (Honduras, Indonesia, Morocco, Mexico, Nicaragua, and the Philippines), evaluated through RCTs, and found no systematic evidence that cash transfers discourage work. Dependency and labor market engagement were also investigated among several types of grants in Mexico and South Africa using both quantitative and qualitative methods (Surender et al. 2010;Alzúa, Cruces, and Ripani 2013;Samson et al. 2013). ...
... Second, and as alluded to earlier, some of the existing programs and services that are being put forth for increased investment may endure challenges as a result of inefficiencies elsewhere in the system, thus limiting their purported effectiveness. For instance, current income assistance programs often provide only very limited funds to individuals, commonly out of an unsubstantiated fear that they will dispose of the money for purchases that may not necessarily be in their best interest or that government assistance will disincentivize individuals to seek employment (Banerjee et al., 2017;Zhao et al., 2020). These limited funds, especially for those experiencing homelessness, may force one to choose between necessities, such as paying for rent or groceries, thus only exacerbating the revolving door of insecurities for these and other necessities, and by consequence, requiring the continued use of social services and other programs 2 (Kenny, 2015). ...
... The second is the fact that households support and value measures that reduce their exposure to adverse economic 70 This social policy is based on two principles: i) ensuring efficiency in the use of resources that a small State can devote to social spending and ii) avoiding adverse incentives to work and the accumulation of assets by beneficiary households (Repetto, 2016). Although the second principle is a valid concern, studies that have sought to demonstrate this adverse effect have not been able to prove it (Alzúa, Cruces, & Ripani, 2013;Banerjee, Hanna, Kreindler, & Olken, 2017;Carneiro, Galasso, & Ginja, 2015). 71 See details in the following link: https://clasemediaprotegida.gob.cl/sobre-clase-media-protegida ...
I propose three new measures of social and economic well-being using different approaches. These measures are applied to Chile using two household surveys: the Panel CASEN and the Financial Survey. First, I use an income positions persistence approach to estimate the persistence of households in different positions of the income distribution. The application of this measure enables us to understand the mechanisms that explain why those at the lower end of the income distribution have a low probability of moving up (sticky floor), and those at the higher end of the income distribution have less chance of moving down (glass floor). The results show that income mobility is particularly high for all groups in the income distribution. Second, I use a low-income dynamic approach to estimate degrees of vulnerability to poverty. This measure enables us to obtain two vulnerability lines that measure the risk of non-poor households falling into poverty in the next period. This enables the identification of three types of households: those with high, moderate and low vulnerability. The latter corresponds to the income-secure middle class. The results show that vulnerability to poverty affects a significant part of the population that exited poverty in the last decade. Third, I use a multidimensional approach to measure economic insecurity at the household level. I build an index that combines four indicators of economic insecurity that cause stress and anxiety: unexpected economic shocks, unprotected employment, over-indebtedness and asset poverty. In this way, the index offers a measure that directly relates economic uncertainty to stress due to the lack of social protection and household buffers to face an unexpected economic shock. The results show that households in the entire income distribution
... Three studies on the effects of direct transfers on work motivation need to be mentioned. Firstly, an analysis of multiple basic income experiments showed "no systematic evidence that cash transfer programs discourage work" (Banerjee et al. 2017). However, one should be thoughtful when extrapolating this result: while it is based on empirical evidence, it should be noted that all controlled trials were done on small scales and small periods, which thus might not be directly applicable to long term and large scale situations. ...
This paper presents an introductory long-term analysis and modelling of the implementation of Universal Basic Income using a modified Solow-Swan growth model with an extension on the labour and capital markets. It concludes that basic income policies could induce a long-term rise of the steady state equilibrium for production per capita and wages through an increase in demand and consumption, while also improving economic growth rate by supporting entrepreneurship and thus enhancing technological development.
... • Algorithmic trading. The financial sector is rapidly developing AI applications, both in the retail area and corporate finance, AI technologies are now used to search for new investment opportunities based on past trends and situations or for the advanced analysis of fraud and the computation of the risk (Banerjee et al. 2016), • Static image recognition. In addition to being potentially useful in agriculture and industry, artificial vision can also be very profitable in the service sector. ...
There is a high potential for artificial intelligence (AI) to become the enabling technology of the new
socio-economical paradigm. The huge amount of academic literature produced in the last few years leaves
little room for doubts about the revolutionary nature of AI. Some scientific papers are focused on negative
aspects of a complete or partial substitution of the workforce by the intelligent machines, while others are
more optimistic and are focused on the ideas revolving around the universal basic income and the decrease
in the number of full-time working hours. The proposed analysis, both of existing literature and new
statistical evidence, aims at the further exploration of the possibility for artificial intelligence to become the
enabling technology of the next technological revolution.
... Politika denarnih transferjev je ena najučinkovitejših strategij socialne države, ko gre za reševanje revščine otrok. Glede na rezultate empiričnih študij denarne pomoči občutno blažijo revščino prikrajšanih gospodinjstev, družin in njihovih otrok (Fiszbein et al., 2009;Morris, Aber, Wolf in Berg, 2012;Bohn, Veiga, Da Dalt, Pereira Brandao in de Carvalho Gouvea, 2014;Ham, 2014;Jones, Kevin in Stabile, 2015;Banerjee, Hanna, Kreindler in Olken, 2015;Hypher in Richards, 2015). Poleg tega imajo »dodatki, posebej namenjeni otrokom«, razkriva Maquet-Engsted (2012, str. ...
The 15–17 years old youngsters are at the greatest risk of poverty and social exclusion among all European children. Lacking economic resources deepens their social exclusion which negatively impacts their social capital and traps them in poverty. The public policy of financial aid (in form of pocket money) to teenagers living in poverty is, therefore, a tool of social justice. Ten in-depth interviews with Slovenian teenagers who received such a cash benefit through a charity project called Godparenting reveal that such a monetary transfer in the name of social justice aids in battling social exclusion even in case of small things like coffee with peers, as it positively impacts subjective well-being, self-esteem and strengthens social capital. Thus it alleviates poverty in the long term. Considering
that the cash transfer teenagers receive is only 30 euros a month, it would be important to think of higher financial help which would even enlarge the opportunities of children living in poverty. Noteworthy is also the finding that the recipients are, despite being happy to receive it, ashamed of the cash transfer in question, making this research an argument for the Universal Basic Income.
Keywords: social justice, social inclusion, equal opportunities, social equality, adolescence, cash transfers.
... Empirical studies reported that cash benefits succeed in alleviation of poverty for the disadvantaged households, families, and their children (Fiszbein et al., 2009;Morris et al., 2012;Bohn et al., 2014;Ham, 2014;Banerjee et al., 2015;Hypher and Richards, 2015;Jones et al., 2015). Moreover, the "benefits specifically targeted at children," reveals Maquet-Engsted (2012: 220), "have the strongest impact and reduce child 4 Other child-related policies are: public spending on services and financial support through tax system (See: OECD, 2014a: 1). 5 Public health insurance, education, childcare allowances, subsidised housing, food assistance, etc. ...
The purpose of this study is to examine a possibility of a social policy for tackling social exclusion and for poverty alleviation. Drawing on in-depth, semi-structured interviews with adolescents who have received such an allowance in the Slovenian context, the study provides an applied philosophy approach through empirical research to connect human experience of social (in)justice with the creation of welfare policies. Findings center specifically on adolescents since, among all European children, the 15-17 years old adolescents are at the greatest risk of poverty and social exclusion. The findings document the importance of an autonomous economic resource for tackling social exclusion which helps to confirm and extend the philosophical framework of Brian Barry's luck-egalitarian and Jonathan Wolff's social-egalitarian stance on social exclusion. The emerged theory reveals a cycle of autonomous economic resource reinforcement (via social inclusion) that could alleviate poverty. This study yields unexpected and new findings for future research on poverty: a narrative device of contradictory statements and the ambivalence towards the benefit on grounds of shame and stigmatisation. The results importantly explicate the ability of consumption as an integral part of social justice. Noteworthy is also this study's contribution to an argument for the Universal Basic Income. ii
... Three of eleven studies reporting on effects at the intensive margin find negative effects. The same lack of effects was observed in the meta-analysis of seven randomized controlled trials (RCTs) of cash transfers performed by Banerjee et al. (2017). Looking for effects both at the extensive and intensive margins, the authors conclude that "This paper does not observe a significant effect of belonging to a transfer program on employment or hours of work in any of the seven programs". ...
Employment is key to combating poverty. Thus, detractors of social assistance programs argue that they create disincentives to work. While there is substantial evidence showing limited effects of these programs on overall labor supply, the jury is still out with respect to their impact on formal employment. This paper exploits an unannounced change in the eligibility rule of the Bolsa Familia program in Brazil, one of the oldest and largest conditional cash transfers in the world, to identify the causal impact of the program on formal employment, combining three large administrative datasets. This paper finds that the program has a positive effect on entry in formal labor market, especially for younger cohorts.
... Os argumentos baseados nos incentivos/desincentivos provocados pelas políticas focalizadas sobre a oferta de trabalho ou a poupança são teoricamente bem assentados, mas esbarram em um problema relativamente sério: não parecem ter base empírica. Com efeito, as amplas revisões de literatura ou meta-avaliações -produzidas por Kabeer e Waddington (2015), Bastagli et al. (2016), Banerjee et al. (2017) e, para o caso do PBF, Oliveira e Soares (2012) -sugerem que os efeitos de programas de transferência de renda sobre a oferta de trabalho são nulos ou perto disso. Efeitos de benefícios sociais sobre a poupança também parecem ser, na melhor das hipóteses, muito limitados, já que a poupança privada dos mais pobres tenderá a ser muito pequena devido à restrição orçamentária (Attanasio e Rohwedder, 2003). ...
This study draws on the recent release of complete information about earnings from the
National Longitudinal Household Survey (Pesquisa Nacional por Amostra de Domicílios
Contínua – PNAD Contínua) for 2012-2018, to evaluate the targeting of the Bolsa
Família Programme. The results confirm the expectations generated by previous studies:
Bolsa Família improved its targeting over the period, which suggests that this progress
resulted from continuous refinement of the programme’s management, and not from
any single measure adopted during any specific year. The analysis of the programme’s
concentration coefficient reveals that it has managed to enhance its potential to fight
income inequality. Despite these indicators, it is estimated that nearly a fifth of the ten per
cent poorest people in the country do not benefit from the programme. Bolsa Família’s
efficient targeting is driven by the poorest regions in the country (Northeast and North);
these same regions also present the fewest exclusion errors. This suggests that the trade-off between inclusion and exclusion errors does not apply to subnational levels in Brazil. In a comparative analysis with other targeted programmes in Latin America, Bolsa Família proved to be one of the “benign” cases: it is comparatively well-targeted and has good coverage (low exclusion rates). The study also evaluates recent proposals to further refine the programme’s targeting.
... Conditional cash transfer programs across the world, with the exception of social security systems, tend to target approximately the bottom fifth of earners. Banerjee et al. (2015) put together a meta-analysis of studies of transfer programs, concluding that the overall labor supply seems to have been unaffected by seven major conditional cash transfer programs, mostly in Latin America. This study takes into account both the decision to work and the number of hours worked. ...
This chapter examines the trajectory of basic income debates in two of the German-speaking countries, Switzerland and Austria, and the activists and proponents involved in them. The supportive discourse on UBI has substantially increased since the early 2000s, peaking with the Swiss referendum campaign in 2016, but endures to the present with activists in politics, business and civil society making their mark in the campaign to realize UBI. Among the Swiss Basic Income Earth Network Switzerland (BIEN-CH) and Initiative Grundeinkommen (IG), and among the Austrians, Katholische Sozialakademie (Ksoe), BIEN Austria (NGSZ) and Generation Grundeinkommen (GG) are important civil society actors in advocating for UBI. At present, the likelihood of passing UBI in the German-speaking countries is quite low, but activists are responsible for keeping it on the political agenda.
... Conditional cash transfer programs across the world, with the exception of social security systems, tend to target approximately the bottom fifth of earners. Banerjee et al. (2015) put together a meta-analysis of studies of transfer programs, concluding that the overall labor supply seems to have been unaffected by seven major conditional cash transfer programs, mostly in Latin America. This study takes into account both the decision to work and the number of hours worked. ...
Basic income is often seen as a threat to the stability of labor markets. However, not only are concerns about mass withdrawal from the labor force unfounded, there is reason to believe that basic income would actually improve the functioning of labor markets. While there is little empirical evidence that can be used to evaluate basic income, behavioral evidence suggests that our risk-averse species likes to work and may become more productive if a basic income were introduced to reduce economic risk. This paper provides basic income activists with both a defense against negative labor market implications, as well as an introduction to why labor markets may actually improve with basic income.
... Anti-poverty programmes in developing countries are typically in the form of cash transfers or workfare programmes (Dreze and Sen 1991;Lipton 1996;Ravallion 1999). There has been considerable debate on the efficacy of cash transfer versus workfare programmes in reaching the poor (Banerjee et al. 2017;Ravallion 2018). One oft-cited advantage of workfare programmes is that in the absence of a sophisticated administrative machinery to identify the poor, they tend to be more effective in reaching the intended beneficiaries (Besley and Coate 1992;Ravallion 1991). ...
... By allowing recipients to choose how to spend money, UCTs may generate psychological benefits for them and help them avoid the consequences of negative stigma and social exclusion that may accompany conditional benefits (Haushofer and Shapiro 2016). The counter-argument, which prevails in the United States, is that unconditional income serves as a windfall for most families and, as such, can act as a disincentive to earn or retrieve income from other available sources (Banerjee et al. 2015). While critics of UCTs hypothesize that cash transfers may be used for illicit substances such as alcohol, tobacco, or drugs rather than health-promoting items such as nutritious food, there is little evidence in studies in the US and Africa to support that contention (Akee et al. 2010;Haushofer and Shapiro 2018). ...
Little is understood about how an unconditional cash transfer might operate and affect behavior among low-income parents of infants in the United States. We investigate these questions using data from a random-assignment pilot study (N = 30) in which unconditional cash transfers were distributed monthly on debit cards to two groups of low-income parents in New York City during the first 12 months of their newborns’ lives. Mothers were randomized to receive either 20 per month. Mothers distinguished spending the cash transfer on essentials vs. extras, such as going out to dinner with family. The monthly cash transfer “tided them over,” even at the lower amount of $20, especially when income from other sources ran short at the end of the month. Some mothers reported saving money for unexpected expenses.
... However, their focus on the human capital accumulation of the young has led to some criticism because they might miss opportunities to alter productive activities and have broader effects on graduation from poverty. Indeed, most cash transfers have been shown to have little impact on work incentives and adult labour supply (see Alzua et al. 2013 andBanerjee et al. 2015 for comparable results from different countries). ...
... In our own research we have shown that cash transfers have no negative effect on labor market participation in former communist countries (Gassmann and Trindade, 2016;Gassmann et al., 2016a). Other authors came to similar conclusions for other countries (Banerjee et al., 2017). ...
... At the same time, there is growing evidence for the costeffectiveness of cash-transfers in delivering food security (Banerjee et al. 2017;Gentilini 2016;Margolies and Hoddinott 2015), and technological and methodological advances offer the means for their efficient implementation (Alderman et al. 2017, 19;Hanna 2017;Saini et al. 2017;Springmann et al. 2016). Many countries have moved away from food subsidy programs towards vouchers or cash transfers. ...
Historically, India has relied on subsidizing staple food as a major instrument in improving food security. Recently, however, cash transfers have entered the debate as an alternative, as they are associated with lower market distortions, leakages and fiscal costs. This study contributes to this debate by analyzing India’s Targeted Public Distribution System (TPDS). Our main objective was to explain the under-purchase, or low take-up, from the TPDS, which is typically attributed to ‘leakage’, i.e. the diversion of food grains from eligible consumers. We provide an alternative solution based on self-targeting; while poorer households increase their consumption from the TPDS, wealthier households restrain from consuming subsidized commodities. Using a large household dataset, we estimated that such a voluntary opt-out system, based on income, would save a minimum of 6.5% of grains released through the TPDS. Besides these demand-driven aspects, our analysis indicates that poor regions perform better at lowering the diversion of grains and that large targeting errors exist among female-led households. Finally, we find substantial regional price differences that would benefit the poor and rural population under a uniform cash-transfer system that does not correct for regional price levels.
... Finally, Banerjee et al. (2016) perform a meta-analysis of seven randomised controlled trials of cash transfers from six countries to measure effects on labour supply. 26 Labour supply was computed in the weekly number of hours of work, with those not working amounting to zero. ...
Social protection benefits could theoretically lead to a distortion in marginal incentives given by market prices and, therefore, could have negative impacts on microeconomic behaviours potentially related to economic growth, such as saving and labour supply. On the other hand, they could allow liquidity- and credit-constrained individuals and households to invest on education, on a new business or even on migrating to places where they could make better use of their skills. This study aims to review the empirical literature about the effects of contributory and non-contributory social protection benefits on a set of microeconomic behaviours that are potentially related to economic growth: i) consumption and saving; ii) labour supply; iii) education; iv) fertility; v) migration; and vi) innovation and risk-taking. The conclusion of this literature review is that there does not seem to be much room for deep concerns or high hopes regarding the possible effects of social protection benefits on economic growth through microeconomic channels.
... Some studies on the topic have found evidence to support little to no disincentive effects. Much of the recent work (Banerjee, Hanna, Kreindler & Olken 2017;Ervin, Elisenda, Silvio, Benjamin, Paul, Stanfeld, Sudhanshu, David & Nelson, 2017) done on programs in developing countries point to there being no disincentive work effects of cash transfer programs on labor in the policy context of developing and emerging economies. ...
The latest available statistics indicate that approximately 46 percent of Puerto Rico's total population receives benefits from the island's Nutrition Assistance Program (NAP). From 2005-2015, the percentage of the Puerto Rican households that received NAP benefits increased 33 percent. This study considers the effect of the amount of money received by the Puerto Rico Nutrition Assistance Program (NAP) beneficiaries on the island's employment rate. In the estimated spatial regression models, NAP family benefits have a significantly negative effect on the employment rate. The empirical results suggest that the NAP benefits that families receive disincentivize them from seeking a job.
Il tema della disuguaglianza nei redditi e nelle ricchezze ha caratterizzato tutte le strutture sociali comparse nella storia dell'uomo ed è diventato via via più importante negli ultimi decenni anche nel dibattito politico nella maggior parte dei Paesi industrializzati. La disuguaglianza, comunque misurata, è aumentata. Il neoliberismo e la deregolamentazione che hanno caratterizzato le politiche economiche degli ultimi decenni sono le parole chiave per comprendere la re-lazione tra Istituzioni e disuguaglianza. Lo scopo del presente contributo è analizzare sinteticamente le cause della povertà in termini di reddito soprattut-to da un punto di vista micro-economico e ragionare sulle politiche di suppor-to ai redditi, in particolare sulle proposte di reddito unico universale. Nella parte finale il si propone per l'Italia una simulazione del reddito unico univer-sale, sotto il vincolo che tale misura sia interamente finanziata attraverso la tassazione IRPEF
Il tema della disuguaglianza nei redditi e nelle ricchezze ha caratterizzato tutte le strutture sociali comparse nella storia dell'uomo ed è diventato via via più importante negli ultimi decenni anche nel dibattito politico nella maggior parte dei Paesi industrializzati. La disuguaglianza, comunque misurata, è aumentata. Il neoliberismo e la deregolamentazione che hanno caratterizzato le politiche economiche degli ultimi decenni sono le parole chiave per comprendere la re-lazione tra Istituzioni e disuguaglianza. Lo scopo del presente contributo è analizzare sinteticamente le cause della povertà in termini di reddito soprattut-to da un punto di vista micro-economico e ragionare sulle politiche di suppor-to ai redditi, in particolare sulle proposte di reddito unico universale. Nella parte finale il si propone per l'Italia una simulazione del reddito unico univer-sale, sotto il vincolo che tale misura sia interamente finanziata attraverso la tassazione IRPEF
Financial inclusion, characterized by access and usage of formal financial services, is a critical driver of economic development and poverty reduction. In Nigeria, a country with a large population of unbanked and underbanked individuals, adoption of Digital Financial Services (DFS) presents a promising avenue for expanding financial inclusion among low- income households. This study focused on evaluating the effectiveness of DFS for promoting financial inclusion among low-income households in Jigawa State, North-West Nigeria. Using a mixed-methods research approach, this study comprehensively assessed the impact of DFS on financial inclusion indicators. The research draws from a representative sample of low- income households in Jigawa State, examining utilization of DFS platforms, perceptions of the benefits and challenges associated with these services. Findings indicate notable increase in financial inclusion among low-income households in Jigawa State following the introduction of DFS. Factors contributing to this positive trend include improved convenience, reduced transaction costs, and increased financial literacy. However, challenges related to digital literacy (complexity) and trust in digital platforms (perceived risk) persist and need to be addressed to maximize the impact of DFS. This research contributes to the ongoing discourse on financial inclusion and digital financial services by providing empirical insights specific to the Jigawa State context. The outcomes of this study are expected to inform policymakers, financial institutions, and DFS providers on strategies for further enhancing the reach and effectiveness of digital financial services in promoting financial inclusion among low-income households not only in Jigawa State but also in similar regions across Nigeria and beyond.
Huws, Torry, and Yi consider the impact on the labour market of the current wave of technological innovation. They consider changes in the quantity and distribution of jobs as well as qualitative shifts in employment that have affected the economic security of workers. In this context of significant change and uncertainty, the authors explore whether Basic Income would offer a useful social protection system for workers. They conclude that, if certain tax and regulatory changes were to accompany the implementation of a Basic Income, workers would benefit from greater flexibility to combine jobs, secure a stable income, and move in and out of the educational system; would experience increased freedom to decline oppressive or degrading labour; and would maintain their psychological motivation to work.
Natural disasters (i.e., flooding) exert a substantial impact on the economic activities of the poverty-stricken coastal population of Cox Bazar, Bangladesh. The economic impact of flooding is measured using individual-level data from the Cox Bazar Panel Survey (CBPS) data. Satellite data, such as the Landsat 8, the Shuttle Radar Topography Mission (SRTM) elevation data, and other resources have been used to identify the flooded areas and other geographical changes across the region. The DID results indicate flood-affected individuals had lower employment, longer work hours, and were more likely to seek jobs. However, those with jobs were found to have greater earnings. The 2SLS results indicate that cash and non-cash assistance mediate the relationship between flooding and economic outcomes. Individuals who received cash assistance were better at integrating as they had better employment rates and higher earnings. In contrast, recipients of non-cash assistance had lower employment rates and had no significant effect on earnings. In addition, the propensity score results imply that individuals with similar demographic characteristics, who have received cash assistance compared to those who did not, have lower food shortages and better health. Lastly, the triple difference estimator shows that individuals living in areas with better access to healthcare facilities had greater employment and earnings compared to those who didn’t.
Tujuan utama dari pemberian program bantuan tunai adalah untuk meningkatkan outcome kesehatan dan pendidikan sebagai indikator pembangunan manusia yang mendasar. Namun, tidak menutup kemungkinan bahwa pemberian bantuan tunai tersebut memiliki dampak sampingan. Studi ini bertujuan untuk menganalisis dampak program bantuan tunai terhadap akumulasi aset tahan lama rumah tangga. Studi ini memanfaatkan data randomized control trial dari desain eksperimental program bantuan tunai Program Keluarga Harapan (PKH) di Indonesia. Adapun jangka waktu dari evaluasi dampak dalam studi ini yakni setelah enam tahun implementasi. Data baseline diperoleh dari Survei Evaluasi Dampak Program PNPM Generasi 2007, sedangkan data follow-up diperoleh dari Survei Pelayanan Kesehatan dan Pendidikan 2013. Dengan menggunakan estimasi dampak intention-to-treat (ITT), diperoleh kesimpulan bahwa program bantuan tunai PKH tidak terbukti secara statistik memiliki dampak terhadap akumulasi aset tahan lama yang dilihat dari kepemilikan televisi, kulkas, dan HP. Hasil studi ini sekaligus memberikan jawaban atas kekhawatiran penggunaan bantuan tunai yang rentan untuk disalahgunakan oleh rumah tangga meskipun diberikan dengan kondisi atau syarat tertentu.
Pääministeri Juha Sipilän hallitusohjelmaan on kirjattu perustulokokeilun toteuttaminen. Perustulokokeilulla selvitetään, miten sosiaaliturvaa voitaisiin uudistaa paremmin vastaamaan työelämän muutoksia,
muuttaa sosiaaliturvaa työhön kannustavaksi, vähentää byrokratiaa ja yksinkertaistaa monimutkaista
etuusjärjestelmää, joka usein luo erilaisia tulo-, kannustin- ja byrokratialoukkuja. Kokeilun toimeenpanoa
varten Valtioneuvoston kanslia tilasi selvityksen perustulon toteuttamisvaihtoehdoista. Hankkeen esiselvitys on luovutettu 30.3.2016, ja siinä pohdittiin esimerkiksi nk. puhtaan perustulon, osittaisen perustulon, negatiivisen tuloveron ja muiden mahdollisten mallien soveltuvuutta kokeiluun. Osin esiselvityksen
pohjalta hallitus antoi esityksen laiksi perustulokokeilusta (HE 215/2016 vp).
Käsillä olevassa loppuraportissa pohditaan perustulon jatkokokeiluiden edellytyksiä. Perustulon erilaisten vaikutusten selvittämiseksi ehdotetaan kokeiluiden sarjaa, jossa erilaisia perustulomalleja ja niihin
liitettyjä erilaisia veromalleja kokeiltaisiin iteratiivisesti. Seuraavana askeleena vuonna 2017 alkavaa
kokeilua voitaisiin täydentää vuonna 2018 alkavalla kokeilulla, jossa kokeilun kohdeväestöä laajennettaisiin työttömien lisäksi pienituloisiin ja samalla kokeilun otoskokoa kasvatettaisiin tuntuvasti tilastollisesti merkitsevien tulosten varmistamiseksi. Kansallisen tulorekisterin valmistumisen jälkeen kokeiluun
voitaisiin ottaa myös negatiivisen tuloveron kaltaisia malleja.
Global GDP is more than 100 trillion dollars, yet 10 % of the world’s population still live in extreme poverty on less than 1 per day from the rich world to each poor person would eliminate extreme poverty directly and at negligible cost. It is the least we should do.
Most commentators have attributed the current agrarian crisis to two successive droughts and demonetization. While droughts do have an adverse impact on agricultural sector, disaggregated data categorically demonstrates that demonetization did not lead to acceleration in the decline of the rural sector. Given that there has been a decline in the rural sector along with the failure of the price policy, there is a growing consensus regarding farm linked cash transfers as an alternative policy choice to address the current rural crisis. However, a cash transfer in the form of a targeted basic income would be a better policy as it will cost the same as an extensive farm sized cash transfer program, but it will be targeted to cover all the poor across the country.
Of the 17 Sustainable Development Goals articulated by the United Nations, number one is the elimination of extreme poverty by 2030. While future economic growth should continue to reduce poverty, it will not solve the problem by itself; thus, there is a potentially important role for national-level transfer programs that assist poor families in developing countries. Such programs are often run by developing country governments. Many countries have implemented transfer programs that seek to target beneficiaries: that is, to identify who is poor and then to restrict transfers to those individuals. Some people have begun to advocate for "universal basic income" programs, which dispense with trying to identify the poor and instead provide transfers to everyone. We begin by considering the universal basic income as part of the solution to an optimal income-taxation problem, focusing on the case of developing countries, where there is limited income data and inclusion in the formal tax system is low. We examine how the targeting of transfer programs is conducted in these settings, and provide empirical evidence on the tradeoffs involved between universal basic income and targeted transfer schemes using data from Indonesia and Peru—two countries that run nationwide transfer programs that are targeted to the poor. We conclude by linking our findings back to the broader policy debate on what tools should be preferred for redistribution, as well as the practical challenges of administering them in developing countries.
We show that extremely poor, war-affected women in northern Uganda have high returns to a package of $150 cash, five days of business skills training, and ongoing supervision. Sixteen months after grants, participants doubled their microenterprise ownership and incomes, mainly from petty trading. We also show these ultrapoor have too little social capital, but that group bonds, informal insurance, and cooperative activities could be induced and had positive returns. When the control group received cash and training 20 months later, we varied supervision, which represented half of the program costs. A year later, supervision increased business survival but not consumption.
Bayesian hierarchical models serve as a standard methodology for aggregation
and synthesis, used widely in statistics and other disciplines. I use this
framework to aggregate the data from seven randomised experiments of expanding
access to microcredit, assessing both the general impact of the intervention
and the heterogeneity across contexts. The general impact on household profits
is small, with a posterior mean of 26 USD PPP per year, and an impact of zero
lies well within the central 50% posterior credible interval. Standard pooling
metrics for the studies indicate 65-95% pooling on the treatment effects,
suggesting that the site-specific effects are informative for each other and
for the general case. Further analysis incorporating household covariates shows
that the cross-study heterogeneity is almost entirely generated by
heterogeneous effects for the 27% of households who previously operated
businesses before microcredit expansion. A cautious assessment of the
correlations between site-specific covariates and treatment effects using a
Bayesian Ridge procedure indicates that the interest rate on the microloans has
the strongest correlation.
We present results from six randomized control trials of an integrated approach to improve livelihoods among the very poor. The approach combines the transfer of a productive asset with consumption support, training, and coaching plus savings encouragement and health education and/or services. Results from the implementation of the same basic program, adapted to a wide variety of geographic and institutional contexts and with multiple implementing partners, show statistically significant cost-effective impacts on consumption (fueled mostly by increases in self-employment income) and psychosocial status of the targeted households. The impact on the poor households lasted at least a year after all implementation ended. It is possible to make sustainable improvements in the economic status of the poor with a relatively short-term intervention.
Copyright © 2015, American Association for the Advancement of Science.
This paper reports the analysis of the impact of Kenya’s Cash Transfer for Orphans and Vulnerable Children Programme on the household decisions on productive activities using data from a randomised experimental design. Results show that the programme had a positive and significant impact on food consumption coming from home production, accumulation of productive assets, especially on the ownership of small livestock, and on formation of nonfarm enterprise, especially for females. The programme has provided more flexibility to families in terms of labour allocation decisions, particularly for those who are geographically isolated. The programme was also found to reduce child labour, an important objective of the programme. However, we find very little impact of the programme on direct indicators of crop production.
This article assesses the role of conditionality in cash transfer programs using a unique experiment targeted at adolescent
girls in Malawi. The program featured two distinct interventions: unconditional transfers (UCT arm) and transfers conditional
on school attendance (CCT arm). Although there was a modest decline in the dropout rate in the UCT arm in comparison with
the control group, it was only 43% as large as the impact in the CCT arm at the end of the 2-year program. The CCT arm also
outperformed the UCT arm in tests of English reading comprehension. However, teenage pregnancy and marriage rates were substantially
lower in the UCT than the CCT arm, entirely due to the impact of UCTs on these outcomes among girls who dropped out of school.
The unique experimental design of the Food Support Programme (Programa de Apoyo
Alimentario) is used to analyse in-kind and cash transfers in the poor rural areas of
southern states of Mexico. The intent-to-treat effect on poverty of cash transfers of real
value 25 per cent less than the market value of in-kind transfers is identical to that of
in-kind transfers. Potential explanations of this result are investigated by looking into
the differences in impacts of in-kind and cash transfers on food consumption and nonfood
expenditures and on the allocation of family labour between agricultural and nonagricultural
activities. Both in-kind and cash transfers have identically large positive
impacts on food consumption. Non-food expenditures are also higher in the localities
with cash transfers, whereas they remain unaffected in the localities with in-kind
transfers. Both kinds of transfers have a significant impact on the time allocation of
males (and not females) who switch from agricultural to non-agricultural activities.
But, the availability of cash transfers has a significantly higher marginal effect than inkind
transfers on the shift towards non-agricultural activities. Overall, the findings
suggest that cash transfers may be better able than in-kind transfers at mitigating the
impact of market imperfections, thus increasing both equity and efficiency.
The paper provides an up-to date and selective review of the literature on how social safety nets contribute to growth. The evidence is carefully chosen to show how safety nets have the potential to overcome constraints on growth linked to market failures, and is organized into 4 distinct pathways: i) encouraging asset accumulation by changing incentives and by addressing imperfections in financial markets caused by constraints in obtaining credit, and from information asymmetries; overcoming such failures helps households to invest into their human capital or productive assets; ii) failures in insurance markets especially in low income setting; safety nets are assisting in managing risk both ex post and ex ante; iii) safety nets are overcoming failure to create assets and other local economy complementary factors to household-level investments; iv) safety nets are shown to relax political constraints on policy. Safety nets have a dual objective of directly alleviating poverty through transfers to the poor and of triggering higher growth for the poor. However, the trade-off between the dual objectives of equity and growth is not eliminated by the potential for productive safety nets; this remains critical for designing social policies.
The authors conduct a randomized experiment in rural Burkina Faso to estimate the impact of alternative cash transfer delivery mechanisms on education. The two-year pilot program randomly distributed cash transfers that were either conditional or unconditional. Families under the conditional schemes were required to have their children ages 7-15 enrolled in school and attending classes regularly. There were no such requirements under the unconditional programs. The results indicate that unconditional and conditional cash transfer programs have a similar impact increasing the enrollment of children who are traditionally favored by parents for school participation, including boys, older children, and higher ability children. However, the conditional transfers are significantly more effective than the unconditional transfers in improving the enrollment of "marginal children" who are initially less likely to go to school, such as girls, younger children, and lower ability children. Thus, conditionality plays a critical role in benefiting children who are less likely to receive investments from their parents.
The Malawi Social Cash Transfer (SCT) scheme is part of a wave of social protection programmes providing cash to poor households in order to reduce poverty and hunger and promote child education and health. This paper looks beyond the protective function of such programmes, analysing their productive impacts. Taking advantage of an experimental impact evaluation design, we find the SCT generates agricultural asset investments, reduces adult participation in low skilled labour, and limits child labour outside the home while increasing child involvement in household farm activities. The paper dispels the notion that cash support to ultra poor households in Malawi is charity or welfare, and provides evidence of its economic development impacts.
In this paper, we estimate the effects of the Conditional Cash Transfer (CCT) programmes in Brazil on the labour supply of adult males and females. We employ the panel of municipalities that are continuously investigated by the Pesquisa Nacional por Amostra de Domicílios (PNAD/IBGE) over the years 2001-2005. The effects of the Brazilian CCT programmes are estimated both on the participation rate and the mean number of hours worked. Since PNAD does not ask directly surveyed families about CCT programme participation, we use an indirect procedure to identify beneficiary families. Our results indicate that the effects of interest are not significant both on statistical grounds and in terms of magnitude.
Investments in human capital in childhood are generally believed to be critical for adult well-being. Children who have higher educational attainment are more productive as adults, earn higher wages, and have better health status than children with less education. In country after country, governments have sought to devise effective policies to increase school enrollment. In this context, cash transfer programs have expanded dramatically in many developing countries, especially in Latin America. These are often conditional cash transfer programs, in which eligible households are given transfers conditional on compliance with certain requirements. In most countries, households are required to send school-aged children to school and to take younger children for regular visits to health centers, where they receive nutritional supplements and growth monitoring. The best known of these programs is Oportunidades (formerly Progresa) in Mexico, although similar programs have also been implemented in a number of other Latin American countries.
This paper evaluates the impact of a cash transfer program in Ecuador, the Bono de Desarrollo Humano (BDH), on school enrollment. This is a large program—in 2004, the BDH budget was approximately 0.7 percent of gross domestic product (GDP). Eligibility for BDH transfers is determined by a proxy means test known as the Beneficiary Identification and Selection System, or Selben. In theory, the 40 percent of households with the lowest Selben score are eligible for monthly transfers.1
The analysis in this paper is divided into two parts. The first part assesses the overall impact of the BDH on school enrollment. During an expansion of the BDH coverage, program administrators undertook an experimental evaluation of the program’s impact. A sample of households that had not previously received transfers was selected and randomly divided into treatment and control groups. Data on both groups were collected at baseline, before households started to receive BDH transfers, and follow-up, approximately one and a half years later. We use this experimental study design to show that BDH transfers significantly increased school enrollment. These results complement earlier findings of positive effects of cash transfer programs on enrollment in Mexico, Colombia, Nicaragua, and Honduras.2
The second part of the paper provides evidence on the relative importance of transfers and conditions (or perceived conditions) in explaining the positive BDH program effects on enrollment. Conditions attached to transfers introduce a kink in the budget constraint, and their effect depends on whether this compels households to behave differently than they would have done otherwise.3
The BDH was originally modeled on Oportunidades. Program administrators intended to condition transfers on school enrollment and attendance, among other things. Local elected leaders (the heads of the Juntas Parroquiales) were encouraged to hold town-hall-style meetings in which the BDH was presented as a compact between the state and beneficiaries—the state agreed to transfer resources to poor households, and these households, in turn, agreed to send their children to school. The BDH program also briefly aired a series of radio and television spots that explicitly linked transfers with school enrollment, and some BDH administrators appear to have stressed the enrollment requirements when they signed up households for transfers. In practice, however, the BDH did not monitor the schooling condition because of administrative constraints, and it thus did not penalize households whose children were out of school. Nevertheless, the BDH information campaign had an effect: in the follow-up survey used in this paper, approximately a quarter of respondents stated that they believed that sending children to school was a BDH program requirement.
We compare the impact of the program among conditioned households (that is, those who told survey enumerators that school enrollment was a BDH requirement) and unconditioned households (those who told enumerators that there was no enrollment requirement attached to transfers). Our estimates show that program effects on enrollment are only significant among conditioned households. Because exposure to the information campaign was not assigned randomly, these comparisons are not experimental. However, the effects we estimate are insensitive to adding a large number of controls, trimming the data, and sweeping out fixed differences between conditioned and unconditioned households. We therefore argue that the larger program effect among conditioned households most likely has a causal interpretation. These...
We evaluate whether state-of-the-art macro models featuring indivisible labor are consistent with modern quasi-experimental micro evidence by synthesizing evidence on both the intensive and extensive margins. We find that micro estimates are consistent with macro estimates of the steady-state (Hicksian) elasticities relevant for cross-country comparisons on both the extensive and intensive margins. However, micro estimates of intertemporal substitution (Frisch) elasticities are an order of magnitude smaller than the values needed to explain business cycle fluctuations in aggregate hours by preferences. The key puzzle to be resolved is why micro and macro estimates of the Frisch extensive margin elasticity are so different.
This article examines the impact of a Nicaraguan conditional cash transfer programme on measures of expenditures and productive investment. Despite clear evidence from a randomised evaluation that the programme increased current expenditures, there is little evidence that it increased agricultural or non-agricultural investment. An estimated marginal propensity to consume out of the transfers of nearly one, combined with no effect of cumulative past transfers on current consumption, corroborate the direct evidence on investment. In contrast to gains made in human capital investment, the potential for long term increases in consumption as a result of other forms of increased investment may be limited.
Conditional cash transfers have been adopted by a large number of countries in the past decade. Although the impacts of these programs have been studied extensively, understanding of the economic mechanisms through which cash and conditions affect household decisions remains incomplete. This paper uses evidence from a program in Cambodia, where eligibility varied substantially among siblings in the same household, to illustrate these effects. A model of schooling decisions highlights three different effects of a child-specific conditional cash transfer: an income effect, a substitution effect, and a displacement effect. The model predicts that such a conditional cash transfer will increase enrollment for eligible children - due to all three effects - but have an ambiguous effect on ineligible siblings. The ambiguity arises from the interaction of a positive income effect with a negative displacement effect. These predictions are shown to be consistent with evidence from Cambodia, where the child-specific program makes modest transfers, conditional on school enrollment for children of middle-school age. Scholarship recipients were more than 20 percentage points more likely to be enrolled in school and 10 percentage points less likely to work for pay. However, the school enrollment and work of ineligible siblings was largely unaffected by the program.
Online document. Incl. bibl., index
Conditional cash transfer (CCT) programmes are becoming an extremely popular tool for improving the education and health outcomes of poor children in developing countries. An incomplete list of countries in which they are being implemented under the support of the World Bank and other international financial institutions includes Mexico, Honduras, Nicaragua, Brazil, Turkey and Mozambique. While the implementation details vary from country to country, many are modelled on the Mexican PROGRESA. In a typical CCT, mothers from poor backgrounds receive cash conditional on their promoting certain activities on behalf of their children. For their youngest children - usually those below the age of 6 - the conditionality involves visits to preventive healthcare centres in which their growth is monitored. School attendance is the most common stipulation for receipt of cash transfers for older children - usually those between 7 and 17 years old. This targeting of health and education of children is at the essence of the long-term poverty alleviation objective of CCT programmes. Such transfer programmes are also aimed at the short-term reduction of poverty, through the provision of immediate funds to indigent households.
In this Briefing Note, we will focus on the programme Familias en Acción (FA), the CCT implemented by the Colombian government from 2001/02. In particular, we will provide estimates of how the programme has influenced key welfare indicators such as school attendance, child nutrition and health status, as well as household consumption. In this respect, we will update the preliminary results that were reported in Attanasio et al. (2003 and 2004).
In many parts of the developing world, rural areas exhibit high rates of unemployment and underemployment. Understanding what prevents people from migrating to find better jobs is central to the development process. In this paper, we examine whether binding credit constraints and childcare constraints limit the ability of households to send labor migrants, and whether the arrival of a large, stable source of income - here, the South African old-age pension - helps households to overcome these constraints. Specifically, we quantify the labor supply responses of prime-aged individuals to changes in the presence of pensioners, using longitudinal data collected in KwaZulu-Natal. Our ability to compare households and individuals before and after pension receipt, and pension loss, allows us to control for a host of unobservable household and individual characteristics that may determine labor market behavior. We find that large cash transfers to elderly South Africans lead to increased employment among prime-aged members of their households, a result that is masked in cross-sectional analysis by differences between pension and non-pension households. Pension receipt also influences where this employment takes place. We find large, significant effects on labor migration upon pension arrival. The pension's impact is attributable both to the increase in household resources it represents, which can be used to stake migrants until they become self-sufficient, and to the presence of pensioners who can care for small children, which allows prime-aged adults to look for work elsewhere.
Conditional cash transfer (CCT) programmes aim to alleviate poverty through monetary and in-kind benefits, as well as reduce future incidence of poverty by encouraging investments in education, health and nutrition. The success of CCT programmes at reducing poverty depends on whether, and the extent to which, cash transfers affect adult work incentives. In this paper we examine whether the PROGRESA programme of Mexico affects adult participation in the labour market and overall adult leisure time, and we link these effects to the impact of the programme on poverty. Utilising the experimental design of PROGRESA's evaluation sample, we find that the programme does not have any significant effect on adult labour force participation and leisure time. Our findings on adult work incentives are reinforced further by the result that PROGRESA leads to a substantial reduction in poverty. The poverty reduction effects are stronger for the poverty gap and severity of poverty measures.
The authors use the unique experimental design of the Food Support Program (Programa Apoyo Alimentario) to analyze in-kind and cash transfers in the poor rural areas of southern states of Mexico. They compare the impacts of monthly in-kind and cash transfers of equivalent value (mean share 11.5 percent of pre-program consumption) on household welfare as measured by food and total consumption, adult labor supply, and poverty. The results show that approximately two years later the transfer has a large and positive impact on total and food consumption. There are no differences in the size of the effect of transfer in cash versus transfers in-kind on consumption. The transfer, irrespective of type, does not affect overall participation in labor market activities but induces beneficiary households to switch their labor allocation from agricultural to nonagricultural activities. The analysis finds that the program leads to a significant reduction in poverty. Overall, the findings suggest that the Food Support Program intervention is able to relax the binding liquidity constraints faced by poor agricultural households, and thus increases both equity and efficiency.
Does child labor decrease as household income rises? This question has important implications for the design of policy on child labor. This paper focuses on a program of unconditional cash transfers in Ecuador. It argues that the effect of a small increase in household income on child labor should be concentrated among children most vulnerable to transitioning from schooling to work. The paper finds support for this hypothesis. Cash transfers have small effects on child time allocation at peak school attendance ages and among children already out of school at baseline, but have large impacts at ages and in groups most likely to leave school and start work. Additional income is associated with a decline in paid work that takes place away from the child's home. Declines in work for pay are associated with increases in school enrollment, especially for girls. Increases in schooling are matched by an increase in education expenditures that appears to absorb most of the cash transfer. However, total household expenditures do not increase with the transfer and appear to fall in households most impacted by the transfer because of the decline in child labor.
A variety of theories of skill formation suggest that investments in schooling and other dimensions of human capital will have lower returns if children do not have adequate levels of cognitive and social skills at an early age. This paper analyzes the impact of a randomized cash transfer program on cognitive development in early childhood in rural Nicaragua. It shows that the program had significant effects on cognitive outcomes, especially language. Impacts are larger for older pre-school age children, who are also more likely to be delayed. The program increased intake of nutrient-rich foods, early stimulation, and use of preventive health care-all of which have been identified as risk factors for development in early childhood. Households increased expenditures on these inputs more than can be accounted for by the increases in cash income only, suggesting that the program changed parents'behavior. The findings suggest that gains in early childhood development outcomes should be taken into account when assessing the benefits of cash transfer programs in developing countries. More broadly, the paper illustrates that gains in early childhood development can result from interventions that facilitate investments made by parents to reduce risk factors for cognitive development.
"In 2000, the Nicaraguan government implemented a conditional cash transfer program designed to improve the nutritional, health, and educational status of poor households, and thereby to reduce short- and long-term poverty. Based on the Mexican government's successful PROGRESA program, Nicaragua's Red de Protección Social (RPS) sought to supplement household income, reduce primary school dropout rates, and increase the health care and nutritional status of children under the age of five. This report represents IFPRI's evaluation of phase I of RPS. It shows that the program was effective in low-income areas and particularly effective when addressing health care and education needs. The report offers the first extensive assessment of a Nicaraguan government antipoverty program." Authors' Abstract
This paper provides empirical evidence about the effect of unearned income on earnings, consumption, and savings. Using an original survey of people playing the lottery in Massachusetts in the mid-1980s, we analyze the effects of the magnitude of lottery prizes on economic behavior. The critical assumption is that among lottery winners the magnitude of the prize is randomly assigned. We find that unearned income reduces labor earnings, with a marginal propensity to consume leisure of approximately 11 percent, with larger effects for individuals between 55 and 65 years old. After receiving about half their prize, individuals saved about 16 percent.
We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. Winning a lottery prize modestly reduces earnings, with the reduction being immediate, persistent, and quite similar by age, education, and sex. A calibrated dynamic model implies lifetime marginal propensities to earn out of unearned income from -0.17 at age 20 to -0.04 at age 60, and labor supply elasticities in the lower range of previously reported estimates. The earnings response is stronger for winners than their spouses, which is inconsistent with unitary household labor supply models.
Conditional Cash Transfers (CCTs) have been shown to increase human capital investments, but their standard features make them expensive. We use a large randomized experiment in Morocco to estimate an alternative government-run program, a “labeled cash transfer” (LCT): a small cash transfer made to fathers of school-aged children in poor rural communities, not conditional on school attendance but explicitly labeled as an education support program. We document large gains in school participation. Adding conditionality and targeting mothers made almost no difference in our context. The program increased parents' belief that education was a worthwhile investment, a likely pathway for the results.
We study a government program in Uganda designed to help the poor and unemployed become self-employed artisans, increase incomes,
and thus promote social stability. Young adults in Uganda’s conflict-affected north were invited to form groups and submit
grant proposals for vocational training and business start-up. Funding was randomly assigned among screened and eligible groups.
Treatment groups received unsupervised grants of $382 per member. Grant recipients invest some in skills training but most
in tools and materials. After four years, half practice a skilled trade. Relative to the control group, the program increases
business assets by 57%, work hours by 17%, and earnings by 38%. Many also formalize their enterprises and hire labor. We see
no effect, however, on social cohesion, antisocial behavior, or protest. Effects are similar by gender but are qualitatively
different for women because they begin poorer (meaning the impact is larger relative to their starting point) and because
women’s work and earnings stagnate without the program but take off with it. The patterns we observe are consistent with credit
constraints.
In what is probably the largest cash transfer program in the world today China’s Dibao program aims to fill all poverty gaps. In theory, the program creates a poverty trap, with 100% benefit withdrawal rate (BWR). But is that what we see in practice? The paper proposes an econometric method of estimating the mean BWR allowing for incentive effects, measurement errors and correlated latent heterogeneity. Under the method’s identifying assumptions, a feasible instrumental variables estimator corrects for incentive effects and measurement errors, and provides a bound for the true value when there is correlated incidence heterogeneity. The results suggest that past methods of assessing benefit incidence using either nominal official rates or raw tabulations from survey data are deceptive. The actual BWR appears to be much lower than the formal rate and is likely to be too low in the light of the literature on optimal income taxation. The paper discusses likely reasons based on qualitative observations from field work. The program’s local implementation appears to matter far more than incentives implied by its formal rules.
The recent Universal Child Allowance program in Argentina provides monthly cash transfers to unregistered workers with children. As the program is accessible only to those who are not in formal employment, it may discourage workers transitions to the formal sector. In this paper we estimate this effect by comparing the transitions to registered jobs of eligible workers (with children) with a similar but not eligible group (without children) over time. The results suggest a statistically significant and economically large disincentive to the labor market formalization of the program beneficiaries. In contrast, there is no sufficient evidence for the existence of a significant incentive for registered workers to become informal.
Welfare programs are often implemented in-kind to promote outcomes that might not be realized under cash transfers. This paper tests whether such paternalistically motivated transfers are justified compared to cash, using a randomized controlled trial of Mexico's food assistance program. In relation to total food consumption, the in-kind transfer was infra-marginal and nondistorting. However, the transfer contained ten food items, and there was large variation in the extent to which individual foods were extra-marginal and distorting. Small differences in the nutritional intake of women and children under in-kind transfers did not lead to meaningful differential improvements in health outcomes compared to cash.
Concerns about incentives and targeting naturally arise when cash transfers are used to fight poverty. We address these concerns in the context of China's Di Bao program, which uses means-tested transfers to try to assure that no registered urban resident has an income below a stipulated "poverty line." There is little sign in the data of poverty traps due to high benefit withdrawal rates. Targeting performance is excellent by various measures; indeed, Di Bao appears to be better targeted than any other program in the developing world. However, all but one measure of targeting is found to be uninformative, or even deceptive, about impacts on poverty. We find that the majority of the poor are not receiving help, even with a generous allowance for measurement errors. While on paper, Di Bao would eliminate urban poverty, it falls well short of that ideal in practice. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors.
The world’s poorest people lack capital and skills and toil for others in occupations that others shun. Using a large-scale and long-term randomized control trial in Bangladesh this paper demonstrates that sizable transfers of assets and skills enable the poorest women to shift out of agricultural labor and into running small businesses. This shift, which persists and strengthens after assistance is withdrawn, leads to a 38% increase in earnings. Inculcating basic entrepreneurship, where severely disadvantaged women take on occupations which were the preserve of non-poor women, is shown to be a powerful means of transforming the economic lives of the poor.
Many studies comparing new treatments to standard treatments consist of parallel randomized experiments. In the example considered here, randomized experiments were conducted in eight schools to determine the effectiveness of special coaching programs for the SAT. The purpose here is to illustrate Bayesian and empirical Bayesian techniques that can be used to help summarize the evidence in such data about differences among treatments, thereby obtaining improved estimates of the treatment effect in each experiment, including the one having the largest observed effect. Three main tools are illustrated: 1) graphical techniques for displaying sensitivity within an empirical Bayes framework, 2) simple simulation techniques for generating Bayesian posterior distributions of individual effects and the largest effect, and 3) methods for monitoring the adequacy of the Bayesian model specification by simulating the posterior predictive distribution in hypothetical replications of the same treatments in the same eight schools.
This paper contributes to the literature on welfare programs by using a Generalized Propensity Score (GPS) approach to estimate the impact of a Conditional Cash Transfer (CCT) on labor supply in Brazil. Unlike other CCT programs that have been evaluated, Bolsa Família is a widespread program that have taken place not only in rural and isolated areas, but also in large cities. Previous findings have shown that this type of welfare benefit does not reduce labor supply and then does not create program dependence. However, our hypothesis is that when the program goes from isolated areas to large cities and everybody is informed about its existence, impacts may differ. We find that the benefit actually increases the participation of households’ additional workers in rural areas. On the other hand, it reduces the participation of households’ main source of labor income in the formal sector in metropolitan areas. Thus the hypothesis that the program creates dependence cannot be rejected for the case of large cities.
The Honduran PRAF experiment randomly assigned conditional cash transfers to 40 of 70 poor municipalities, within five strata defined by a poverty proxy. Using census data, we show that eligible children were 8 percentage points more likely to enroll in school and 3 percentage points less likely to work. The effects were much larger in the two poorest strata, and statistically insignificant in the other three (the latter finding is robust to the use of a separate regression-discontinuity design). Heterogeneity confirms the importance of judicious targeting to maximize the impact and cost-effectiveness of CCTs. There is no consistent evidence of effects on ineligible children or on adult labor supply.
Using a student level randomization, we compare three education-based conditional cash transfers designs: a standard design, a design where part of the monthly transfers are postponed until children have to re-enroll in school, and a design that lowers the reward for attendance but incentivizes graduation and tertiary enrollment. The two nonstandard designs significantly increase enrollment rates at both the secondary and tertiary levels while delivering the same attendance gains as the standard design. Postponing some of the attendance transfers to the time of re-enrollment appears particularly effective for the most at-risk children. (JEL H23, I21, I22, J13, O15)
Conditional cash transfer (CCT) programs link public transfers to human capital investment in hopes of alleviating current poverty and reducing its intergenerational transmission. However, little is known about their long-term impacts. This paper evaluates longer-run impacts on schooling and work of the best-known CCT program, Mexico’s PROGRESA/Oportunidades, using experimental and nonexperimental estimators based on groups with different program exposure. The results show positive impacts on schooling, reductions in work for younger youth (consistent with postponing labor force entry), increases in work for older girls, and shifts from agricultural to nonagricultural employment. The evidence suggests schooling effects are robust with time.
This paper evaluates how the Progresa program, which provides poor mothers in rural Mexico with education grants, has affected enrollment. Poor children who reside in communities randomly selected to participate in the initial phase of the Progresa are compared to those who reside in other (control) communities. Pre-program comparisons check the randomized design, and double-difference estimators of the program's effect on the treated are calculated by grade and sex. Probit models are also estimated for the probability that a child is enrolled, controlling for additional characteristics of the child, their parents, local schools, and community, and for sample attrition, to evaluate the sensitivity of the program estimates. These estimates of program short-run effects on enrollment are extrapolated to the lifetime schooling and the earnings of adults to approximate the internal rate of return on the public schooling subsidies as they increase expected private wages.
From book description:
Modern labor economics has continued to grow and develop since the first volumes of this Handbook were published. The subject matter of labor economics continues to have at its core an attempt to systematically find empirical analyses that are consistent with a systematic and parsimonious theoretical understanding of the diverse phenomenon that make up the labor market. As before, many of these analyses are provocative and controversial because they are so directly relevant to both public policy and private decision making. In many ways the modern development in the field of labor economics continues to set the standards for the best work in applied economics. This volume of the Handbook has a notable representation of authors - and topics of importance - from throughout the world.
This paper studies the effect of welfare programs on work incentives and the labor supply of adults in developing countries. The document builds on the experimental evaluations of three programs implemented in rural areas: Mexico’s PROGRESA, Nicaragua’s Red de Protección Social (RPS) and Honduras’ Programa de Asignación Familiar (PRAF). The impact of welfare on labor supply has been widely studied in developed countries, where most recent initiatives attempt to mitigate negative effects on work incentives. The programs under study are conditional cash transfers (CCT), which combine monetary benefits with incentives for curbing child labor and fostering the accumulation of human capital. Unlike their counterparts in developed economies, however, they do not account for potential impacts on the labor supply of adults, and there is little systematic evidence on this aspect despite a wealth of empirical studies on their intended outcomes. Comparable results for the three countries indicate mostly negative but small and non-significant effects of the programs on the employment of adults, no reallocation of labor between agricultural and other sectors, and a reduction in hours worked by adults in eligible households in RPS. Moreover, PROGRESA had a positive effect on beneficiaries’ wages. The programs did not imply major disincentives to work, despite substantial transfers, but they had some effects on local labor markets. This mechanism is related to recent findings on the indirect impact of CCTs on ineligible households, and implies that future evaluation studies and designs should account for the equilibrium effects of the interventions.
In developing countries, identifying the poor for redistribution or social insurance is challenging because the government lacks information about people’s incomes. This paper reports the results of a field experiment conducted in 640 Indonesian villages that investigated two main approaches to solving this problem: proxy-means tests, where a census of hard-to-hide assets is used to predict consumption, and community-based targeting, where villagers rank everyone on a scale from richest to poorest. When poverty is defined using per-capita expenditure and the common PPP$2 per day threshold, we find that community-based targeting performs worse in identifying the poor than proxy-means tests, particularly near the threshold. This worse performance does not appear to be due to elite capture. Instead, communities appear to be using a different concept of poverty: the results of community-based methods are more correlated with how individual community members rank each other and with villagers’ self-assessments of their own status than per-capita expenditure. Consistent with this, the community-based methods result in higher satisfaction with beneficiary lists and the targeting process.