Cash Is Queen : Local Economy Effects of Cash Transfers to Women in West Africa

This paper examines the direct and spillover effects of cash transfers paid in a rural and low-income setting. In the short run, an unconditional cash transfer program for ultra-poor households in Northern Nigeria led to a 12 percentage point increase in micro-enterprise formation for program recipients. Moreover, benefits continued to increase in magnitude after program cessation and also extended to nearby non-beneficiary households when compared to counterparts in other villages where no cash transfers were paid. One year after program cessation, beneficiary women increased their enterprise ownership rate by 20 percentage points, while the rate for non-beneficiary women increased by 13 percentage points. Both groups of households enjoyed higher consumption and food security, and shifted away from husband-centered toward joint intrahousehold decision-making. One mechanism for this growth spillover is a boost to aggregate demand for local goods, in part identified by the positive link between the (randomly determined) neighborhood density of cash transfer households and enterprise creation. The increase in local female entrepreneurial activity translates to a partial income multiplier of at least 0.32. Women face restrictive social norms around work in this context and the slack productive resource brought into activity by the cash transfer is female labor, specifically female-led entrepreneurship near the home.