Re-thinking Social Protection: From Poverty Alleviation to Building Resilience in Middle-Income Households
We exploit an expansion in social protection to middle-income households to provide evidence on how middle-income households cope with economic shocks and how to build their resilience. We use a regression discontinuity design around the eligibility cutoff for a program that delivered monthly cash transfers mainly through bank accounts in Colombia. We find no impacts on food security, education, and health outcomes--the target outcomes of antipoverty programs. In contrast, program eligibility increases non-food consumption and reduces debt for routine expenses. Bank account ownership increases by 16%, and beneficiaries are more likely to borrow from formal lenders. Amid systemic and idiosyncratic shocks, the program prevents middle-income households from reducing non-food spending and acquiring debt for routine expenses. Moreover, when hit by severe shocks, beneficiary households substitute away from predatory loans. The results suggest that middle-income households are constrained by lack of insurance and that social protection can build middle-income households' resilience to shocks through both cash transfers and by integrating beneficiaries into formal credit markets.
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| Language: | English |
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Inter-American Development Bank
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| Subjects: | Conditional Cash Transfer, Transfer Program, Administrative Register, Universal Basic Income, Bank Loan, External Shock, Insurance, Economy, Income Distribution, Social Protection, Coronavirus, I18 - Government Policy • Regulation • Public Health, I38 - Government Policy • Provision and Effects of Welfare Programs, O15 - Human Resources • Human Development • Income Distribution • Migration, Basic income;Insurance;Cash transfers, |
| Online Access: | http://dx.doi.org/10.18235/0004969 https://publications.iadb.org/en/re-thinking-social-protection-poverty-alleviation-building-resilience-middle-income-households |
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| Summary: | We exploit an expansion in social protection to middle-income households to provide evidence on how middle-income households cope with economic shocks and how to build their resilience. We use a regression discontinuity design around the eligibility cutoff for a program that delivered monthly cash transfers mainly through bank accounts in Colombia. We find no impacts on food security, education, and health outcomes--the target outcomes of antipoverty programs. In contrast, program eligibility increases non-food consumption and reduces debt for routine expenses. Bank account ownership increases by 16%, and beneficiaries are more likely to borrow from formal lenders. Amid systemic and idiosyncratic shocks, the program prevents middle-income households from reducing non-food spending and acquiring debt for routine expenses. Moreover, when hit by severe shocks, beneficiary households substitute away from predatory loans. The results suggest that middle-income households are constrained by lack of insurance and that social protection can build middle-income households' resilience to shocks through both cash transfers and by integrating beneficiaries into formal credit markets. |
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