TY  - JOUR
AU  - Araujo, M. Caridad
AU  - Bosch, Mariano
AU  - Schady, Norbert
TI  - Can Cash Transfers Help Households Escape an Inter-Generational Poverty Trap?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 22670
PY  - 2016
Y2  - September 2016
DO  - 10.3386/w22670
UR  - http://www.nber.org/papers/w22670
L1  - http://www.nber.org/papers/w22670.pdf
N1  - Author contact info:
Caridad Araujo
Inter-American Development Bank  
1300 New York Avenue, N.W. 
Washington, DC 20577
E-Mail: mcaraujo@iadb.org

Mariano Bosch Mossi
Inter-American Development Bank  
1300 New York Avenue, N.W. 
Washington, DC 20577
E-Mail: mbosch@iadb.org

Norbert Schady
Inter-American Development Bank  
1300 New York Avenue, N.W. 
Washington, DC 20577
E-Mail: norberts@iadb.org
M1  - published as M. Caridad Araujo, Mariano Bosch, Norbert Schady. "Can Cash Transfers Help Households Escape an Intergenerational Poverty Trap?," in Christopher B. Barrett, Michael R. Carter, and Jean-Paul Chavas, editors, "The Economics of Poverty Traps" University of Chicago Press (2019)

M3  - presented at "The Economics of Asset Accumulation and Poverty Traps", June 28-29, 2016
AB  - Many poor households in developing countries are liquidity-constrained. As a result, they may under-invest in the human capital of their children. We provide new evidence on the long-term (10-year) effects of cash transfers using data from Ecuador. Our analysis is based on two separate sources of data and two identification strategies. First, we extend the results from an experiment that randomly assigned children under the age of 6 years to “early” or “late” treatment groups. Although the early treatment group received twice as much in transfers, we find no difference between children in the two groups on performance on a large number of tests. Second, we use a regression discontinuity design exploiting the fact that a “poverty index” was used to determine eligibility for transfers. We focus on children who were just-eligible and just-ineligible for transfers when they were in late childhood, and compare their school attainment and work status 10 years later. Transfers increased secondary school completion, but the effects are small, between 1 and 2 percentage points from a counterfactual school completion rate of 75 percent. We conclude that any effect of cash transfers on the inter-generational transmission of poverty in Ecuador is likely to be modest.
ER  -