Cash Transfers in an Epidemic Context : The Interaction of Formal and Informal Support in Rural Malawi

This paper investigates the short-run consumption expenditure dynamics and the interaction of public and private arrangements of ultra-poor and labor-constrained households in Malawi using an original dataset from the Mchinjii social cash transfer pilot project (one of the first experiments of social protection policies based on unconditional cash transfers in Sub-Saharan Africa). The authors exploit the unique source of exogenous variation provided by the randomized component of the program in order to isolate the effect of cash transfers on consumption expenditures as well as the net crowding out effect of cash transfers on private arrangements. They find a statistically significant reduction effect on the level of consumption expenditures for those households receiving cash transfers, thus leading to the rejection of the perfect risk sharing hypothesis. Moreover, by looking at the effects of cash transfers on private arrangements in a context characterized by imperfect enforceability of contracts and by a social fabric heavily compromised by high HIV/AIDS rates, the analysis confirms the presence of crowding out effects on private arrangements when looking at gifts and (to a lesser extent) remittances, while informal loans seem to be completely independent from the cash transfer's reception. From a policy perspective, the paper offers a contribution to the evaluation of the very recent wave of social protection policies based on (unconditional) cash transfers in Sub-Saharan Africa, suggesting that there might be an important role for public interventions aimed at helping households to pool risk more effectively.

Bibliographic Details

Main Authors:	Strobbe, Francesco, Miller, Candace
Language:	English
Published:	2011-10-01
Subjects:	AGRICULTURAL INPUTS, AGRICULTURAL OUTPUT, AMOUNT OF RISK, ASYMMETRIC INFORMATION, BENEFICIARIES, BORROWER, BORROWING, CAPITAL MARKETS, CASH TRANSFER, CASH TRANSFERS, CHILD POVERTY, CHRONIC POVERTY, COLLATERAL, CONSUMPTION EXPENDITURE, CONSUMPTION EXPENDITURES, CONSUMPTION SMOOTHING, CONTRACT ENFORCEMENT, COPING BEHAVIORS, CREDIT MARKET, CREDIT MARKET CONSTRAINTS, CREDIT TRANSACTIONS, CROP YIELDS, CROWDING OUT, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DROUGHT, DURABLE, ECONOMIC CONDITIONS, ECONOMIC GROWTH, ECONOMIC SHOCKS, EMPLOYMENT, ENFORCEABILITY, ENFORCEABILITY OF CONTRACTS, EXTENDED FAMILIES, FOOD AID, FOOD CONSUMPTION, FOOD CONSUMPTION EXPENDITURES, FOOD DISTRIBUTION, FOOD INSECURITY, FOOD ITEMS, FOOD POLICY, FOOD PRICES, FOOD SECURITY, FREE FOOD, GOVERNMENT INTERVENTIONS, GROSS DOMESTIC PRODUCT, HOUSEHOLD COMPOSITION, HOUSEHOLD CONSUMPTION, HOUSEHOLD HEAD, HOUSEHOLD HEADS, HOUSEHOLD INCOME, HOUSEHOLD LEVEL, HOUSEHOLD SIZE, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD TRANSFERS, HUMAN DEVELOPMENT, HUMAN DEVELOPMENT INDEX, HUMAN RESOURCES, IDIOSYNCRATIC RISK, IDIOSYNCRATIC SHOCKS, INCOME, INCOME INEQUALITY, INCOME SHOCKS, INFLATION, INFLATION RATE, INFORMAL INSURANCE, INFORMAL LOANS, INFORMAL SUPPORT, INSTRUMENT, INSURANCE MARKETS, INSURANCE SCHEMES, INTERNATIONAL BANK, INVESTING, LABOR MARKET, LABOUR, LEGAL FRAMEWORKS, LIVESTOCK OWNERSHIP, LOAN, LOCAL CURRENCY, MALNUTRITION, MEDICAID, MORTALITY, NATIONAL POVERTY, NATIONAL POVERTY LINE, NEGATIVE SHOCKS, OLD AGE, OLD AGE PENSIONS, PARTIAL RISK, POLITICAL ECONOMY, POOR, POOR HEALTH, POOR HOUSEHOLD, POOR HOUSEHOLDS, POVERTY LINE, POVERTY REDUCTION, PRIVATE INSURANCE, PRIVATE TRANSFERS, PROTECTION MECHANISMS, PROTECTION POLICIES, PROTECTION POLICY, PROVISION OF ASSISTANCE, PUBLIC INTERVENTION, PUBLIC INTERVENTIONS, PUBLIC PENSION, PUBLIC TRANSFER, PUBLIC TRANSFERS, REMITTANCE, REMITTANCES, REPAYMENT, RISK SHARING, RISK SHARING ARRANGEMENTS, RURAL, RURAL AREAS, RURAL COMMUNITY, RURAL CREDIT, RURAL CREDIT MARKET, RURAL CREDIT MARKETS, RURAL HOUSEHOLDS, RURAL VILLAGES, SAFETY, SAFETY NET, SAFETY NETS, SHOCK, SHOCKS TO INCOME, SMALLHOLDER FARMING, SOCIAL ASSISTANCE, SOCIAL INSURANCE, SOCIAL PROTECTION, SOCIAL SAFETY NET, SOCIAL SAFETY NETS, SOCIAL SECURITY, SOCIAL TRANSFER, SOCIAL WELFARE, TARGETING, TAX, TRADING, TRANSFER BENEFICIARIES, TRANSFER PROGRAM, TRANSFER PROGRAMS, TRANSFER RECIPIENT, TRANSFER RECIPIENTS, TRANSITORY SHOCKS, ULTRA POOR, VALUABLE ASSETS, VILLAGE ECONOMIES, VULNERABLE PEOPLE, WEALTH EFFECT, WORKING CONDITIONS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111004141054 https://hdl.handle.net/10986/3588
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