The effect of monthly cash transfers during five years on households’ wealth

Published in: Economic Development and Cultural Change (Forthcoming). (with Andrea Molina-Vera )

In 2003 the government of Ecuador started providing a fixed monthly cash transfer to households that score below the 40th percentile of the country’s wealth index in that year. Households’ wealth was again measured in 2008 and in 2014. We exploit rich register data from this setting to estimate the effects of receipt of the transfer during five years on households’ wealth, labor supply, marital status and fertility. Because we know which households received the transfer prior to 2008, we can differentiate between effects on prior recipients and on prior non-recipients. We find that receipt of the transfer from 2009 onwards has a significantly negative effect on households’ wealth index measured in 2014. We also find that women who receive the transfer are less likely to be married and, therefore, to have a spouse who works. The sizes of these effects are significantly larger for prior non-recipients than for prior recipients. We find no effects on female labor supply or on fertility

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