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Cash transfer programs with income multipliers

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  • Sadoulet, Elisabeth
  • Davis, Benjamin
  • de Janvry, Alain

Abstract

Cash transfer programs induce multiplier effects when recipients put the money they receive to work to generate additional income. The ultimate income effects are multiples of the amounts transferred. This paper analyzes the PROCAMPO program in Mexico, which was introduced to compensate farmers for the anticipated negative effect of the North American Free Trade Agreement (NAFTA) on the price of basic crops. The transfer rules and the timing of the panel data collected allow unique control of biases in this impact analysis. We find that the multiplier among ejido sector recipients is in the range of 1.5 to 2.6. Multipliers are higher for medium and large farm households, low numbers of adults in the household, nonindigenous backgrounds, and households located in the Center and Gulf regions. High multipliers reflect marginal income opportunities that were unrealized due to liquidity constraints that the transfers eased. Opportunities came from the asset endowments that these households have, particularly irrigated land, and these opportunities were enhanced by access to technical assistance.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series FCND briefs with number 99.

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Date of creation: 2001
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Handle: RePEc:fpr:fcndbr:99

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Keywords: Subsidies Mexico ; income ;

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  1. Hoddinott, John & Haddad, Lawrence James & Besley, Tim & Adato, Michelle, 2001. "Participation and poverty reduction," FCND discussion papers 98, International Food Policy Research Institute (IFPRI).
  2. Wydick, Bruce, 1999. "The Effect of Microenterprise Lending on Child Schooling in Guatemala," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 853-69, July.
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Cited by:
  1. Latruffe, Laure & Davidova, Sophia & Douarin, Elodie & Gorton, Matthew, 2008. "Can the CAP payments facilitate the growth of individual farms in the New Member States post-EU accession?," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43611, European Association of Agricultural Economists.
  2. Latruffe, Laure & Davidova, Sophia & Douarin, Elodie & Gorton, Matthew, 2008. "Can the CAP payments facilitate the growth of individual farms in the NMS post-EU accession?," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK 36861, Agricultural Economics Society.

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