The Long-Term Impact of Unconditional Cash Transfers to the Poor: Experimental Evidence from Kenya

Abstract

This paper describes the impacts of unconditional cash transfers distributed on economic and psychological outcomes three years after the beginning of the program. Using a randomized controlled trial, we find that transfer recipients have higher levels of asset holdings, consumption, food security and psychological well-being relative to non-recipients in the same village. The effects are similar in magnitude to those observed in a previous study nine months after the beginning of the program. Comparing recipient households to non-recipients in distant villages, we find that transfer recipients have 40% more assets (USD 422 PPP) than control households three years after the transfer, equivalent to 60% of the initial transfer (USD 709 PPP). In contrast, other outcomes do not show significant treatment effects in the across-village analysis, possibly owing to lower power and within-village spillovers. We do find some spillover effects. Households impacted by spillovers have lower consumption and food security than pure control households, perhaps due to the sale of productive assets. Estimates of spillover effects on other outcomes are inconclusive due to differential attrition between spillover and pure control households. We also find little evidence of differential treatment effects depending on the transfer design (whether transfers are made men or women, in monthly payments or a single lump-sum, or a large or small transfer). Thus, cash transfers result in sustained increases in assets. Long-term impacts on other dimensions, and potential spillover effects, remain to be substantiated by future work.

  • Country
    Kenya
  • Behavior
    Psychological Well Being
  • Sector
    Work and Productivity
  • Authors
    Johannes Haushofer, Jeremy Shapiro
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