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The Effects of Cash Transfers

Paper Session

Sunday, Jan. 6, 2019 10:15 AM - 12:15 PM

Atlanta Marriott Marquis, International 7
Hosted By: American Economic Association
  • Chair: Anna Aizer, Brown University

The Long Run Effects of Tying Cash Transfers to Marital Status on Family Well-Being

Anna Aizer
,
Brown University
Shari Eli
,
University of Toronto
Adriana Lleras-Muney
,
University of California-Los Angeles

Abstract

The objective of welfare is to improve child well-being, but it can also create disincentives for mothers to marry, potentially negatively affecting children in the long run. ​Using administrative data for more than 10,000 women from the Mother's​ Pension Program, the first welfare program in the US, ​we find that welfare receipt does does not affect lifetime remarriage rates though results in delaying marriage by about half a year. These delays are concentrated in the first three years after application. Although theory predicts delays should be associated with improvements in the quality of the match, the data suggests women married better men only in states were welfare laws were liberal and thus where the stigma of welfare was low. We find no changes in the lifetime fertility and work behavior of the mother. Overall the long term benefits of welfare appear to accrue to children (rather than mothers) and they do not seem to be mediated greatly by changes in the marriage and labor market outcomes of mothers.

Equilibrium Effects of Unconditional Cash Transfers

Johannes Haushofer
,
Princeton University
Edward Miguel
,
University of California-Berkeley
Paul Niehaus
,
University of California-San Diego
Michael Walker
,
University of California-Berkeley

Abstract

The economic effects of unconditional cash transfers (UCTs) have received significant attention in recent years. However, the effects of UCTs on the local economy remain incompletely understood. We report results from randomized controlled trial on the UCT program of the NGO GiveDirectly in Kenya in which we study these effects. We randomly assigned 653 villages to treatment or control status, and GiveDirectly delivered a transfer of USD 1000 to each eligible household in treatment villages, for a total of about USD 15m in transfers. Together, the transfers amounted to a shock of about 15 percent of local GDP, making them as large or larger in magnitude than many economic stimulus programs implemented by governments. We study the effects of these transfers on consumer prices, wages, rents, and production. Together, these results will contribute to a fuller understanding of the effects of UCTs not only on recipient households, but on the local economy more broadly.

The Long-Term Impacts of Industrial and Entrepreneurial Work: Experimental Evidence

Chris Blattman
,
University of Chicago
Stefan Dercon
,
University of Oxford
Simon Franklin
,
London School of Economics

Abstract

Can one-time interventions help poor and underemployed youth overcome barriers to wage or self employment? We study the effects of two interventions across five sites in Ethiopia: a start-up grant of $300 plus business training (intended to relieve capital constraints); and a one-time industrial job offer (intended to help low-skilled youth with no formal work experience gain entry into the formal sector). Among young, mostly female, job applicants in Ethiopia, we randomly assigned them to the start-up grant, job offer, or a control group. After one year, grant recipients were more likely to be self-employed and had a third greater earnings than controls. Those offered industrial jobs were somewhat more likely to be working in the industrial sector, but the offer had no impact on incomes and adverse effects on health. After five years, all these effects dissipated. We find nearly total convergence in incomes, health, occupational choice, and hours of work between in all experimental conditions. Over time, the control group overcame entry barriers to self-employment and wage work, and in part caught up to the start-up group in incomes and employment. Many of those in the start-up arm also exited their enterprises over time and saw their real incomes and employment fall. Those offered the industrial job tended to exit the sector over time. We see no long-term effects on ill health, though this could be in part because some of the control group found work in industry as well.
Discussant(s)
Laura Wherry
,
University of California-Los Angeles
Bryce Steinberg
,
Brown University
Benjamin Olken
,
Massachusetts Institute of Technology
JEL Classifications
  • I3 - Welfare, Well-Being, and Poverty
  • H2 - Taxation, Subsidies, and Revenue