Jennifer Denno Cissé is a PhD candidate at Cornell’s Dyson School. Emilia Tjernström is an Assistant Professor of Public Affairs and Agricultural and Applied Economics at the University of Wisconsin-Madison.
Many poor households struggle to accumulate wealth or increase incomes at a rate that allows them to climb out of poverty. Maitreesh Ghatak points out that this slow accumulation may not explicitly be due to a poverty trap. He notes that while financial market failures in combination with other market failures can ensnare poor households in a poverty trap, limited access to financial services can result in such slow improvements in living conditions that it resembles a poverty trap – even in the absence of one. Nonetheless, understanding the constraints to household asset accumulation is crucial to designing effective anti-poverty policies, regardless of whether households face an explicit poverty trap or not.
In the final session of the the National Bureau of Economic Research and the Feed the Future Innovation Lab for Assets and Market Access Economics of Asset Accumulation and Poverty Traps workshop, participants listened to leading researchers evaluate the impacts of pro-poor cash and asset transfer programs from a variety of contexts.
Karen Macours presented joint work with Renos Vakis on the Medium-Term Impacts of a Productive Safety Net on Aspirations and Human Capital Investments. They find that the Nicaraguan Atención a Crisis conditional cash transfer (CCT) program had substantial medium-term effects on human capital investment and attitudes towards the future. The effects are largest for the arm of the intervention that combined a CCT with a productive investment grant – and especially when the beneficiary received the same treatment as a local community leader. The authors interpret these heterogeneous impacts as “aspirational spillovers,” tying in with another conference paper by Lybbert and Wydick on aspirations and hope.
M. Caridad Araujo presented joint work with Norbert Schady and Mariano Bosch (all from the Inter-American Development Bank) called “Cash Transfers and Poverty Traps: A Tale of Two Generations” (presentation slides). Their work attempts to understand the long-term impact of cash transfers on human capital investment using data from the Bono de Desarrollo Humano program in Ecuador. Previous work by Christina Paxson and Schady on the program’s short-term impacts found substantial impacts. In this recent work, however, Araujo and her coauthors argue that human capital investments (measured by enrollment, educational attainment, and test scores) appear to not have been sustained over the long term. Audience members suggested that this may be because the control group was eventually treated, and that looking more carefully at the duration of time that a child spent treated may be a more useful approach than thinking of the treatment as binary.
Finally, Oriana Bandiera presented a very thorough paper (joint with Robin Burgess, Narayan Das, Selim Gulesci, Imran Rasul, and Munshi Sulaiman) on Labor Markets and Poverty in Village Economies. The paper exploits an enormous dataset covering over 21,000 households to evaluate the impacts of a nationwide program that transfers livestock assets and training to ultra-poor women in Bangladesh. Poor women in Bangladesh typically work as low-paid and intermittent laborers rather than in animal husbandry, despite the high returns and relative stability that livestock rearing bring. The RCT enables the authors to explore whether this labor allocation is due to barriers to accessing high return labor activities.
The results show remarkable increases in poor women’s labor allocation, in asset accumulation – both of livestock and land. After four years, the treated households increased consumption by 10%. The project demonstrates how, given an understanding of the constraints to asset accumulation, policies and interventions can be designed to ease those constraints, allowing poor households to climb out of poverty. A careful cost-benefit analysis shows that while the program is expensive at the outset, the average ratio of benefits to costs exceeds one at every decile of the distribution of impacts.
As Greg Collins of USAID noted during the final panel of the conference, the role for research in the aid world can be to determine what works, helping donors understand how to invest strategically. The papers in this session constitute excellent examples of research that can inform policy, whether by identifying high-return activities or by reminding us that the solutions are not always easy.