Template-type: ReDif-Paper 1.0
Author-Name: Palacios Mora, Juan Carlos
Author-workplace-name: Mt Economic Research Inst on Innov/Techn
Author-Name: de Crombrugghe, Denis
Author-workplace-name: RS: GSBE other - not theme-related research, RS: FSE DACS Mathematics Centre Maastricht, QE Econometrics
Author-Name: Gassmann, Franziska
Author-workplace-name: 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
Title: Money is not enough
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.
Classification-JEL: i38,h53,c14,d81
Series: UNU-MERIT Working Papers
Creation-Date: 20221121
Number: 2022-038
File-URL: https://cris.maastrichtuniversity.nl/ws/files/113473334/wp2022_038.pdf
File-Format: application/pdf
File-Size: 1961046
Handle: Repec:unm:unumer:2022038
DOI: