Indirect Effects of an Aid Program: How Do Cash Transfers Affect Ineligibles' Consumption?

Cash transfers to eligible households indirectly increase the consumption of ineligible households living in the same villages. This effect operates through insurance and credit markets: ineligible households benefit from the transfers by receiving more gifts and loans and by reducing their savings....

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Bibliographic Details
Published in:The American economic review 2009-03, Vol.99 (1), p.486-508
Main Authors: Angelucci, Manuela, De Giorgi, Giacomo
Format: Article
Language:English
Subjects:
Aid
Bond markets
Capital transfers
Cash flow
Consumer economics
Consumption
Corn prices
Credit insurance
Credit market
Economic impact
Effects
Estimates
Food consumption
Household consumption
Household economics
Households
Insurance
Local economy
Low income groups
Market prices
No observed adverse effect level
Nutrition
Poverty
Shorter Papers
Standard error
Standard of living
Studies
Towns
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Summary:Cash transfers to eligible households indirectly increase the consumption of ineligible households living in the same villages. This effect operates through insurance and credit markets: ineligible households benefit from the transfers by receiving more gifts and loans and by reducing their savings. Thus, the transfers benefit the local economy at large; looking only at the effect on the treated underestimates the impact. One should analyze the effects of this class of programs on the entire local economy, rather than on the treated only, and use a village-level randomization, rather than selecting treatment and control subjects from the same community.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.99.1.486