Do cash transfers have impacts on student Academic, cognitive, and enrollment outcomes? Evidence from rural China

Poverty has significant and lasting adverse impacts on child development. In recent decades, Cash transfer (CT) programs are widely used to address child poverty, and have become one of the most important social-protection programs for improving welfare outcomes of children. This study evaluates the effects of the rural-China School Subsidy Program (SSP) on compulsory student academic, cognitive achievement, and enrollment outcomes. Instituted in 2006, the program targets students from poor families in rural areas, who receive cash transfers of about 1000 yuan (US$150) per year, or 15% of the average per capita disposable rural income. Our sample is drawn from the China Education Panel Survey (CEPS), and includes 3552 compulsory students in rural China. In the data analysis, we employed the difference-in-differences model with propensity score matching (PSM-DID), and the logit model. Our results show that the program significantly increases student enrollment, but has no effect on academic performance or cognitive achievement. Further, the positive enrollment effects of the program are greater for students with less-educated fathers. The results are robust across alternative matching methods. Our findings suggest that the program results in partial improvement to student enrollment in rural areas, but that more support is needed for improving overall student welfare. One concern in implementing the SSP is that due to the lack of effective supervision, teachers are more likely to offer subsidies to students with high academic standing. This will reduce the welfare improvement effect of SSP.