Work

Investing Cash Transfers to Raise Long-Term Living Standards

Year: 2012

Type: article

Abstract: Using data from a randomized experiment, we find that poor rural Mexican households invested part of their cash transfers from the Oportunidades program in productive assets, increasing agricultural income by almost 10 percent after 18 months of benefits. We estimate that for each peso transferred, households consume 74 cents and invest the rest, permanently increasing long-term consumption by about 1.6 cents. Results suggest that cash transfers can achieve long-term increases in consumption through investment in productive activities, thereby permitting beneficiary households to attain higher living standards that are sustained even after transitioning off the program. (JEL D14, H23, I38, O12)

Source: American Economic Journal Applied Economics

DOI: 10.1257/app.4.1.164

Authors: Paul J Gertler, Sebastian W Martinez, Marta Rubio-Codina

Institutions: University of California, Berkeley, Inter-American Development Bank, Institute for Fiscal Studies

Language: English

Topic: Poverty, Education, and Child Welfare

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

SDGs: No poverty, Decent work and economic growth, Zero hunger

Open Access status: green

Funder: Economic and Social Research Council