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Indirect Effects of an Aid Program: How Do Cash Transfers Affect Ineligibles' Consumption?

Listed author(s):
  • Manuela Angelucci
  • Giacomo De Giorgi

Cash transfers to eligible households indirectly increase the consumption of ineligible households living in the same villages. This effect operates through insurance and credit markets: ineligible households benefit from the transfers by receiving more gifts and loans and by reducing their savings. Thus, the transfers benefit the local economy at large; looking only at the effect on the treated underestimates their impact. One should analyze the effects of this class of programs on the entire local economy, rather than on the treated only, and use a village-level randomization, rather than selecting treatment nd control subjects from the same community. (JEL H23, I38, O12, O15)

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 99 (2009)
Issue (Month): 1 (March)
Pages: 486-508

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Handle: RePEc:aea:aecrev:v:99:y:2009:i:1:p:486-508
Note: DOI: 10.1257/aer.99.1.486
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  5. Szeidl, Adam & Rosenblat, Tanya & Mobius, Markus & Karlan, Dean, 2009. "Trust and Social Collateral," Scholarly Articles 3051620, Harvard University Department of Economics.
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  11. Gertler, Paul & Martinez, Sebastian & Rubio-Codina, Marta, 2006. "Investing cash transfers to raise long term living standards," Policy Research Working Paper Series 3994, The World Bank.
  12. Cattaneo, Alejandra & Lalive, Rafael, 2006. "Social Interactions and Schooling Decisions," CEPR Discussion Papers 5816, C.E.P.R. Discussion Papers.
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  14. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-244, April.
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  18. Cochrane, John H, 1991. "A Simple Test of Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 957-976, October.
  19. Narayana Kocherlakota, 2010. "Implications of Efficient Risk Sharing Without Commitment," Levine's Working Paper Archive 2053, David K. Levine.
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  22. Albarran, Pedro & Attanasio, Orazio P., 2002. "Do Public Transfers Crowd Out Private Transfers? Evidence from a Randomized Experiment in Mexico," WIDER Working Paper Series 006, World Institute for Development Economic Research (UNU-WIDER).
  23. Tomas J. Philipson, 2000. "External Treatment Effects and Program Implementation Bias," NBER Technical Working Papers 0250, National Bureau of Economic Research, Inc.
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