IDEAS home Printed from https://ideas.repec.org/p/unm/unumer/2022038.html
   My bibliography  Save this paper

Money is not enough

Author

Listed:
  • Palacios Mora, Juan Carlos

    (Mt Economic Research Inst on Innov/Techn)

  • de Crombrugghe, Denis

    (RS: GSBE other - not theme-related research, RS: FSE DACS Mathematics Centre Maastricht, QE Econometrics)

  • Gassmann, Franziska

    (RS: GSBE UM-BIC, RS: GSBE MORSE, Maastricht Graduate School of Governance, RS: GSBE MGSoG, RS: UNU-MERIT Theme 2, RS: UNU-MERIT Theme 6)

Abstract

The effectiveness of cash transfer programs to foster social mobility in the medium and long run is still unclear. Using a RDD we found that after six years of exposure to the Ecuadorean cash transfer, living conditions of beneficiaries are worse off than non-beneficiaries. We argue that it is the mechanism to evaluate continuity that incentivizes households to remain poor. Continuity is evaluated every 4-6 years based solely on a proxy-means score and not on whether households are on a path towards escaping poverty. Furthermore, households do not know how the score pis estimated and their proximity to the cutoff. This creates uncertainty on the side of beneficiaries, who take long-term suboptimal decisions to maximize their short-term utility. We also estimate the effect of the old-age pension’s branch of the program, whose beneficiaries do not face uncertainty about their continuity, finding no negative effects for that branch.

Suggested Citation

  • Palacios Mora, Juan Carlos & de Crombrugghe, Denis & Gassmann, Franziska, 2022. "Money is not enough," MERIT Working Papers 2022-038, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2022038
    as

    Download full text from publisher

    File URL: https://cris.maastrichtuniversity.nl/ws/files/113473334/wp2022_038.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Schady, Norbert & Rosero, José, 2008. "Are cash transfers made to women spent like other sources of income?," Economics Letters, Elsevier, vol. 101(3), pages 246-248, December.
    2. Ponce, Juan & Bedi, Arjun S., 2010. "The impact of a cash transfer program on cognitive achievement: The Bono de Desarrollo Humano of Ecuador," Economics of Education Review, Elsevier, vol. 29(1), pages 116-125, February.
    3. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
    4. M. Caridad Araujo & Mariano Bosch & Norbert Schady, 2017. "Can Cash Transfers Help Households Escape an Intergenerational Poverty Trap?," NBER Chapters, in: The Economics of Poverty Traps, pages 357-382, National Bureau of Economic Research, Inc.
    5. Orazio Attanasio & Katja Kaufmann, 2009. "Educational Choices, Subjective Expectations, and Credit Constraints," NBER Working Papers 15087, National Bureau of Economic Research, Inc.
    6. Norbert Schady & Maria Caridad Araujo, 2008. "Cash Transfers, Conditions, and School enrollment in Ecuador," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 43-77, January.
    7. Christina Paxson & Norbert Schady, 2010. "Does Money Matter? The Effects of Cash Transfers on Child Development in Rural Ecuador," Economic Development and Cultural Change, University of Chicago Press, vol. 59(1), pages 187-229, October.
    8. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications - Books, The World Bank Group, number 2597.
    9. Lawrance, Emily C, 1991. "Poverty and the Rate of Time Preference: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 54-77, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. M. Caridad Araujo & Mariano Bosch & Norbert Schady, 2017. "Can Cash Transfers Help Households Escape an Intergenerational Poverty Trap?," NBER Chapters, in: The Economics of Poverty Traps, pages 357-382, National Bureau of Economic Research, Inc.
    2. Mideros Andrés & O’Donoghue Cathal, 2015. "The Effect of Unconditional Cash Transfers on Adult Labour Supply: A Unitary Discrete Choice Model for the Case of Ecuador," Basic Income Studies, De Gruyter, vol. 10(2), pages 225-255, December.
    3. Eric V. Edmonds & Norbert Schady, 2012. "Poverty Alleviation and Child Labor," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 100-124, November.
    4. Schady, Norbert, 2012. "Cash transfers and anemia among women of reproductive age," Economics Letters, Elsevier, vol. 117(3), pages 887-890.
    5. Miguel Nino-Zarazua, 2011. "Mexico’s Progresa-Oportunidades and the emergence of Social Assistance in Latin America," Global Development Institute Working Paper Series 14211, GDI, The University of Manchester.
    6. Noemi Pace & Silvio Daidone & Benjamin Davis & Luca Pellerano, 2016. "Does "soft conditionality" increase the impact of cash transfers on desired outcomes? Evidence from a randomized control trial in Lesotho," Working Papers 2016:33, Department of Economics, University of Venice "Ca' Foscari".
    7. Casco José L., 2022. "Intra-household Resource Shares under Poverty Transfers: Evidence from Ecuador," Working Papers 2022-03, Banco de México.
    8. Jules Gazeaud & Claire Ricard, 2021. "Conditional cash transfers and the learning crisis: evidence from Tayssir scale-up in Morocco," NOVAFRICA Working Paper Series wp2102, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    9. Baird, Sarah & McIntosh, Craig & Özler, Berk, 2019. "When the money runs out: Do cash transfers have sustained effects on human capital accumulation?," Journal of Development Economics, Elsevier, vol. 140(C), pages 169-185.
    10. María Gabriela Palacio Ludeña, 2019. "Institutionalizing Segregation: Women, Conditional Cash Transfers, and Paid Employment in Southern Ecuador," Population and Development Review, The Population Council, Inc., vol. 45(S1), pages 245-273, December.
    11. Marx, Luana, 2023. "How is the Bolsa Família program associated with the test scores performance of economically disadvantaged pupils in Brazil?," International Journal of Educational Development, Elsevier, vol. 102(C).
    12. Karen Macours & Norbert Schady & Renos Vakis, 2012. "Cash Transfers, Behavioral Changes, and Cognitive Development in Early Childhood: Evidence from a Randomized Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 247-273, April.
    13. Paredes, Tatiana, 2017. "The long-term effects of cash transfers on education and labor market outcomes," MPRA Paper 88809, University Library of Munich, Germany, revised 03 Sep 2018.
    14. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications - Books, The World Bank Group, number 2597.
    15. José L. Casco, 2024. "Intra-household resource shares under poverty transfers: evidence from Ecuador," Review of Economics of the Household, Springer, vol. 22(3), pages 1243-1274, September.
    16. Thomas Buser & Hessel Oosterbeek & Erik Plug & Juan Ponce & José Rosero, 2017. "The Impact of Positive and Negative Income Changes on the Height and Weight of Young Children," The World Bank Economic Review, World Bank, vol. 31(3), pages 786-808.
    17. Richard Groot & Tia Palermo & Sudhanshu Handa & Luigi Peter Ragno & Amber Peterman, 2017. "Themed Issue: Cash Transfers and Microfinance," Development Policy Review, Overseas Development Institute, vol. 35(5), pages 621-643, September.
    18. Hidrobo, Melissa & Fernald, Lia, 2013. "Cash transfers and domestic violence," Journal of Health Economics, Elsevier, vol. 32(1), pages 304-319.
    19. Contreras Suarez, Diana & Cameron, Lisa A., 2016. "Conditional Cash Transfers: Do They Change Time Preferences and Educational Aspirations?," IZA Discussion Papers 10309, Institute of Labor Economics (IZA).
    20. Stephen Smith, 2018. "Development Economics Meets the Challenges of Lagging U.S. Areas: Applications to Education, Health and Nutrition, Behavior, and Infrastructure," Working Papers 2018-7, The George Washington University, Institute for International Economic Policy.

    More about this item

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unm:unumer:2022038. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ad Notten (email available below). General contact details of provider: https://edirc.repec.org/data/meritnl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.