Indirect Effects of an Aid Program: How Do Cash Transfers Affect Ineligibles' Consumption?
Manuela Angelucci, Giacomo De Giorgi
American Economic Review · 2009 · Volume 99 · Issue 1
Abstract
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)
Keywords
Taxation and Subsidies: Externalities, Redistributive Effects, Environmental Taxes and Subsidies, Welfare and Poverty: Government Programs, Provision and Effects of Welfare Programs, Microeconomic Analyses of Economic Development, Economic Development: Human Resources, Human Development, Income Distribution, Migration
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