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Impact of social fund on the welfare of rural households : evidence from the Nepal poverty alleviation fund

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  • Parajuli, Dilip
  • Acharya, Gayatri
  • Chaudhury, Nazmul
  • Thapa, Bishnu Bahadur

Abstract

The Nepal Poverty Alleviation Fund is a World Bank supported community-driven development program. Its objective is to improve rural welfare, particularly for groups that have traditionally been excluded for reasons of gender, ethnicity, caste, and location. Since its launch in 2004, the Fund has covered the 40 poorest districts of the country, supported some 15,000 community organizations, and benefited more than 2.5 million people. This paper attempts to estimate the impact of this large-scale program using a randomized phase-in approach, in which certain localities are randomly selected for earlier intervention than others. Using two rounds of survey data and a difference-in-difference combined with instrumental variable estimation method, it finds statistically significant causal impact of the program on key welfare outcomes. The treatment-on-the-treated estimate on real per capita consumption is 19 percent growth. Other impacts include a 19 percentage points decline on incidence of food insecurity (defined as food sufficiency for six months or less) and a 15 percentage points increase in the school enrollment rate among 6-15 year-olds. Impacts (positive or negative) are yet to be detected on indicators associated with child malnutrition, social capital, and empowerment. The policy implications of these results should be of interest to the government and to development partners in determining what may be effective instruments to deliver services to marginalized communities in what remains a fragile and difficult political environment.

Suggested Citation

  • Parajuli, Dilip & Acharya, Gayatri & Chaudhury, Nazmul & Thapa, Bishnu Bahadur, 2012. "Impact of social fund on the welfare of rural households : evidence from the Nepal poverty alleviation fund," Policy Research Working Paper Series 6042, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6042
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    References listed on IDEAS

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    1. Christopher F Baum & Mark E Schaffer & Steven Stillman, 2002. "IVREG2: Stata module for extended instrumental variables/2SLS and GMM estimation," Statistical Software Components S425401, Boston College Department of Economics, revised 09 Feb 2016.
    2. Abhijit V. Banerjee & Shawn Cole & Esther Duflo & Leigh Linden, 2007. "Remedying Education: Evidence from Two Randomized Experiments in India," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1235-1264.
    3. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 1-19.
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    Cited by:

    1. Nguyen, Tu Chi & Rieger, Matthias, 2017. "Community-Driven Development and Social Capital: Evidence from Morocco," World Development, Elsevier, vol. 91(C), pages 28-52.
    2. Djimeu, Eric W., 2014. "The impact of social action funds on child health in a conflict affected country: Evidence from Angola," Social Science & Medicine, Elsevier, vol. 106(C), pages 35-42.

    More about this item

    Keywords

    Rural Poverty Reduction; Poverty Monitoring&Analysis; Housing&Human Habitats; Regional Economic Development;

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