General Equilibrium Effects of Cash Transfers: Experimental Evidence from Kenya

Abstract

The CEGA Working Paper Series showcases ongoing and completed research by faculty affiliates of the Center. CEGA Working Papers employ rigorous evaluation techniques to measure the impact of large-scale social and eco-nomic development programs, and are intended to encourage discussion and feedback from the global development community.

General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence from India

“…Even analyzing our own data while ignoring market spillovers to control areas would meaningfully understate impacts on wages and employment. Viewed positively, our study demonstrates the feasibility of conducting experiments with units of randomization large enough to capture general equilibrium effects (Cunha et al, 2019;Muralidharan and Niehaus, 2017;Egger et al, 2019). Fifth, our results highlight the importance of program implementation quality in developing countries as a first order issue in and of itself.…”

Cash Transfers and Micro-Enterprise Performance: Theory and Quasi-Experimental Evidence from Kenya

“…Positive spillovers on non-beneficiary households have indeed been identified in a handful of recent papers (see e.g. Angelucci and De Giorgi 2009;Cunha et al 2018;D'Aoust et al 2018;Egger et al 2019). Second, the direct effect of cash transfers on beneficiary households depends, in the first place, on how businesses react to the demand shock, which in turn depends on the market structure.…”

“…Cash transfer programs are rapidly expanding in developing countries, following mounting evidence of their positive, wide-ranging, and persistent effects (Bastagli et al 2016;Haushofer and Shapiro 2018;Egger et al 2019). Cash-based programming is increasingly used by governments and by development and humanitarian agencies to "deliver greater choice and empowerment to affected people and strengthen local markets" (Inter-Agency Standing Committee 2016).…”

“…The cash-transfer literature also identified positive and negative externalities on non-beneficiaries through informal social protection and market effects (see e.g. Angelucci and De Giorgi 2009;Cunha et al 2018;Haushofer and Shapiro 2018;D'Aoust et al 2018;Egger et al 2019). Theory and empirical evidence on the effects of cash transfers on businesses is, however, extremely limited.…”

Using Household Grants to Benchmark the Cost Effectiveness of a USAID Workforce Readiness Program

“…It therefore appears that we can quite simply conclude that our study did not generate detectable within-village spillover effects on outcomes. While our blocked lotteries do not allow us to study the kinds of cross-village General Equilibrium (GE) effects generated in Egger et al (2019), the size of our transfers are tiny relative to local GDP and it appears unlikely that we would have generated meaningful local GE effects. We do not see the kind of zero-sum diversionary treatment effects uncovered by job-training programs in more formalized labor markets (Crépon et al, 2013), presumably because a) our overall impact on employment was small, and b) the informal labor…”