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Investing Cash Transfers to Raise Long-Term Living Standards

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  • Paul J. Gertler
  • Sebastian W. Martinez
  • Marta Rubio-Codina

Abstract

Using data from a randomized experiment, we find that poor rural Mexican households invested part of their cash transfers from the Oportunidades program in productive assets, increasing agricultural income by almost 10 percent after 18 months of benefits. We estimate that for each peso transferred, households consume 74 cents and invest the rest, permanently increasing long-term consumption by about 1.6 cents. Results suggest that cash transfers can achieve long-term increases in consumption through investment in productive activities, thereby permitting beneficiary households to attain higher living standards that are sustained even after transitioning off the program. (JEL D14, H23, I38, O12)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 4 (2012)
Issue (Month): 1 (January)
Pages: 164-92

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Handle: RePEc:aea:aejapp:v:4:y:2012:i:1:p:164-92

Note: DOI: 10.1257/app.4.1.164
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Development that Works: CCTs: not the silver bullet, but with long lasting positive effects
    by Pablo Ibarrarán in Eval Central on 2013-04-24 10:55:46
  2. Transferencias condicionadas: no son varita mágica, pero hay efectos positivos de largo plazo
    by Pablo Ibarrarán in Hacia el desarrollo efectivo on 2013-04-24 10:53:51
  3. Identifying the dynamic protective effects of social programs
    by Jed Friedman in Development Impact on 2012-07-11 13:15:25
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Alderman, Harold & Yemtsov, Ruslan, 2013. "How can safety nets contribute to economic growth ?," Policy Research Working Paper Series 6437, The World Bank.
  2. Haagh, Louise, 2011. "Working Life, Well-Being and Welfare Reform: Motivation and Institutions Revisited," World Development, Elsevier, vol. 39(3), pages 450-473, March.
  3. Angelucci, Manuela, 2013. "Migration and Financial Constraints: Evidence from Mexico," IZA Discussion Papers 7726, Institute for the Study of Labor (IZA).
  4. Coady, David & Martinelli, Cesar & Parker, Susan W., 2013. "Information and participation in social programs," Policy Research Working Paper Series 6319, The World Bank.
  5. Ariel Fiszbein & Norbert Schady & Francisco H. G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications, The World Bank, number 2597, January.
  6. Patrick Carter, 2012. "Aid Allocation Rules," Bristol Economics Discussion Papers 12/630, Department of Economics, University of Bristol, UK.
  7. Orazio Attanasio & Valérie Lechene, 2013. "Efficient responses to targeted cash transfers," IFS Working Papers W13/28, Institute for Fiscal Studies.
  8. Macours, Karen & Premand, Patrick & Vakis, Renos, 2012. "Transfers, Diversification and Household Risk Strategies: Experimental evidence with lessons for climate change adaptation," CEPR Discussion Papers 8940, C.E.P.R. Discussion Papers.
  9. Almeida, Rita K. & Galasso, Emanuela, 2007. "Jump-Starting Self-Employment? Evidence among Welfare Participants in Argentina," IZA Discussion Papers 2902, Institute for the Study of Labor (IZA).
  10. John Maluccio, 2010. "The Impact of Conditional Cash Transfers on Consumption and Investment in Nicaragua," Journal of Development Studies, Taylor & Francis Journals, vol. 46(1), pages 14-38.
  11. Debowicz, Darío & Golan, Jennifer, 2014. "The impact of Oportunidades on human capital and income distribution in Mexico: A top-down/bottom-up approach," Journal of Policy Modeling, Elsevier, vol. 36(1), pages 24-42.
  12. Patrinos, Harry Anthony & Skoufias, Emmanuel & Lunde, Trine, 2007. "Indigenous peoples in Latin America : economic opportunities and social networks," Policy Research Working Paper Series 4227, The World Bank.
  13. World Bank, 2006. "Making the New Indonesia Work for the Poor," World Bank Other Operational Studies 8172, The World Bank.
  14. Azer Efendiev & Pavel Sorokin, 2013. "Research in Social Organization as Factor Affecting Rural Economic Growth in Developing Society: Theoretical and Methodological Challenges," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 3(10), pages 2236-2245, October.
  15. Fitz, Dylan, 2013. "Development Chutes and Ladders: A Joint Impact Evaluation of Asset and Cash Transfers in Brazil," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150254, Agricultural and Applied Economics Association.
  16. Solomon Asfaw & Silvio Daidone & Benjamin Davis & Josh Dewbre & Alessandro Romeo & Paul Winters & Katia Covarrubias & Habiba Djebbari, 2012. "Analytical Framework for Evaluating the Productive Impact of Cash Transfer Programmes on Household Behaviour ? Methodological Guidelines for the From Protection to Production Project," Working Papers 101, International Policy Centre for Inclusive Growth.
  17. de Hoop, Jacobus & Rosati, Furio C., 2013. "Cash Transfers and Child Labour," IZA Discussion Papers 7496, Institute for the Study of Labor (IZA).

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