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Flashcards in Safety Nets Deck (16):

Authors of this paper?

Alderman and Yemster (2013)


Safety Nets (SN)

Non-contributory transfers generally targeted to the poor.



Beneficiaries of cash transfers invested 26% of the cash received - SNs are not just used for current consumption.


Conditional Cash Transfers (CCTs)

Transfers that strictly enforce compliance with conditions, normally health/education related.


Unconditional Cash Transfers (UCTs)

Transfers that have no conditions, but also aim at stimulating demand for investments in health and education.



Beneficiaries of CCTs were told there was a schooling requirement but the condition was not strictly enforced. But those that believed there were co-responsibilities has higher enrolments than other cash recipients.



CCTs and UCTs both reduced school dropouts for young girls but the reduction among UCT recipients was less than half of the effect of those receiving CCTs.


Benefits of cash transfers are heterogenous

Greater benefits have been noted for those who were more malnourished from the start.


Insurance influences decisions taken by small farmers

When provided with rainfall insurance in INDIA, farmers switched to more profitable but riskier cash crops.


SNs as a form of insurance

SNs have been shown to reduce disinvestment in light of economic shocks, as opposed to when households merely try to smooth their consumption.


Ricardian equivalence

Households change their behaviour in anticipation of future higher taxes thus offsetting the short run benefits of fiscal expansionary policies.


SNs facilitate the introduction of beneficial reforms

They provide compensation to offset these reforms. The intro of cash transfers in MEXICO coincided with NAFTA in 1994 - small producers would have been affected as domestic prices were reduced.


SNs may also reduce inequality and increase social cohesion

EL SALVADOR: public works program targeted potential delinquent youths and developed a scheme that increased the opportunity cost for participating in crime.


Transfer programs often have a dual objective...

Raising current consumption and promoting investments - makes it difficult to compare outcomes of SNs with direct investments.


Beneficiaries of social grants in SOUTH AFRICA...

Put more effort into finding employment and were more successful in finding employment that comparably poor households who didn't receive these grants.


Two overall justifications for the use of safety nets

1. Direct effect on poverty reduction.
2. Contribution to growth.