Interventions in Developing Countries

Working Papers

Long Term Effects of Cash Transfer Programs in Colombia
with L. Cardona-Sosa, C. Medina, C. Meghir, and C.M. Posso-Suárez (July 2021, NBER Working Paper No. 29056)

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Abstract: Conditional Cash transfer (CCT) programs have been shown to have positive effects on a variety of outcomes including education, consumption and health visits, amongst others. We estimate the long-run impacts of the urban version of Familias en Acción, the Colombian CCT program on crime, teenage pregnancy, high school dropout and college enrollment using a Regression Discontinuity design on administrative data. ITT estimates show a reduction on arrest rates of 2.7pp for men and a reduction on teenage pregnancy of 2.3pp for women. High school dropout rates were reduced by 5.8pp and college enrollment was increased by 1.7pp for men

Freeing Financial Education via Tablets: Experimental Evidence from Colombia
with M. Bird, L. Cardona-Sosa, and P. Lavado (June 2019, NBER Working Paper No. 25929)

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Abstract: Financial knowledge is critical for making sound decisions that foster financial health and protect consumers from predation. A widely-used tool for building this capability is financial education. Yet evidence suggests that conventional approaches which teach concepts in classroom-style settings are ineffective and expensive at scale, especially for lower-income users. More recent findings indicate that customizing financial education to the needs, interests, and location of participants may increase impact, though doing so in a cost-effective and scalable way remains challenging. This randomized evaluation of a tablet-based financial education program with mostly female recipients of a conditional cash transfer (CCT) program in Colombia offers evidence for how to design and scale an effective digital-based financial education program. Results indicate that the LISTA Initiative had significant positive impacts on financial knowledge, attitudes, practices, and performance, increasing for poorer, less educated, and more rural populations, with users exhibiting increased financial health over two years later. Critical mechanisms included well-designed content and a social learning component. Yet the longer-term impact on formal financial inclusion was limited, suggesting the possible benefits of combining supply-side solutions with financial education interventions.

Conditional Cash Transfers, Women and the Demand for Food
with V. Lechene (September 2010, IFS Working Paper W10/17)

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Abstract: We examine the effect of large cash transfers on the consumption of food by poor households in rural Mexico. The transfers represent 20% of household income on average, and yet, the budget share of food is unchanged following receipt of this money. This is an important puzzle to solve, particularly so in the context of a social welfare programme designed in part to improve nutrition of individuals in the poorest households. We estimate an Engel curve for food. We rule out price increases, changes in the quality of food consumed and homotheticity of preferences as explanations for this puzzle. We also show that food is a necessity, with a strong negative effect of income on the food budget share. The decrease in food budget share caused by the large increase in income is cancelled by some other relevant aspect of the programme so that the net effect is nil. We argue that the program has not changed preferences and that there is no labelling of money. We propose that the key to the puzzle resides in the fact that the transfer is put in the hands of women and that the change in control over household resources is what leads to the observed changes in behaviour.

Publications

The Effect of Gender-Targeted Conditional Cash Transfers on Household Expenditures: Evidence from a Randomized Experiment
with A. Armand, P. Carneiro, V. Lechene (October 2020, The Economic Journal)

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Abstract: This article studies the differential effect of targeting cash transfers to men or women on household expenditure on non-durables. We study a policy intervention in the Republic of North Macedonia that offers cash transfers to poor households, conditional on having their children attending secondary school. The recipient is randomised across municipalities, with payments targeted to either the mother or the father of the child. Targeting transfers to women increases the expenditure share on food by 4 to 5 percentage points. At low levels of food expenditure, there is a shift towards a more nutritious diet.

Microcredit Contracts, Risk Diversification and Loan Take-Up
with B. Augsburg and R. De Haas (August 2018, Journal of the European Economic Association)

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Abstract: We study theoretically and empirically the demand for microcredit under different liability arrangements and risk environments. A theoretical model shows that the demand for joint-liability loans can exceed that for individual-liability loans when risk-averse borrowers value their long-term relationship with the lender. Joint liability then offers a way to diversify risk and reduce the chance of losing access to future loans. We also show that the demand for loans depends negatively on the riskiness of projects. Using data from a randomised controlled trial in Mongolia we find that these model predictions hold true empirically. In particular, we use innovative data on subjective risk perceptions to show that expected project risk negatively affects the demand for loans. In line with an insurance role of joint-liability contracts, this effect is muted in villages where joint-liability loans are available.

Vocational Training for Disadvantaged Youth in Colombia: A Long-Term Follow-Up
with A. Guarín, C. Medina, and C. Meghir (April 2017, American Economic Journal: Applied Economics)

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Abstract: We evaluate the long-term impacts of a randomized Colombian training and job placement program. Following the large short-term effects, we now find that the program effects persist, increasing formal participation and earnings contributions to social security and working in larger firms. By using a large administrative source we are also able to establish that the program improved both male and female labor market outcomes by a similar amount–a result that was not apparent with the smaller evaluation sample. The results point to a cost-effective approach to reducing informality and improving labor market outcomes in the long run.

Challenges to Promoting Social Inclusion of the Extreme Poor: Evidence from a Large-Scale Experiment in Colombia
with L. Abramosky, K. Barron, P. Carneiro, and G. Stoye (Spring 2016, Economia)

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Abstract: We evaluate the large-scale pilot program of an innovative and major welfare intervention in Colombia, which combines home visits by trained social workers to households in extreme poverty with preferential access to social programs. We use a randomized control trial and a very rich data set collected as part of the evaluation to identify program impacts on the knowledge and take-up of social programs and the labor supply of targeted households. We find no consistent impact of the program on these outcomes, possibly because the way the pilot was implemented resulted in very light treatment in terms of home visits. Importantly, administrative data indicate that the program has been rolled out nationally in a very similar fashion, suggesting that this major national program is likely to fail in making a significant contribution to reducing extreme poverty. We suggest that the program should undergo substantial reforms, which in turn should be evaluated.

Should Cash Transfers Be Conditional? Conditionality, Preventive Care, and Health Outcomes
with V. Oppedisano and M. Vera-Hernández (April 2015, American Economic Journal: Applied Economics)

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Abstract: We study a Conditional Cash Transfer program in which the cash transfers to the mother only depend on the fulfillment of the national preventive visit schedule by her children born before she registered in the program. We estimate that preventive visits of children born after the mother registered in the program are 50 percent lower because they are excluded from the conditionality requirement. Using the same variation, we also show that attendance to preventive care improves children health.

The Impacts of Microfinance: Evidence from Joint-Liability Lending in Mongolia
with B. Augsburg, R. De Haas, E. Fitzsimons, and H. Harmgart (January 2015, American Economic Journal: Applied Economics)

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Abstract: We present evidence from a randomized field experiment in rural Mongolia to assess the poverty impacts of a joint-liability microcredit program targeted at women. We find a positive impact of access to group loans on female entrepreneurship and household food consumption but not on total working hours or income in the household. A simultaneously introduced individual-liability microcredit program delivers no significant poverty impacts. Additional results on informal transfers to families and friends suggest that joint liability may deter borrowers from using loans for noninvestment purposes with stronger impacts as a result. We find no difference in repayment rates between both types of microcredit.

Efficient Responses to Targeted Cash Transfers
with V. Lechene (February 2014, Journal of Political Economy)

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Abstract: We estimate and test the restrictions of a collective model of household consumption, using z-conditional demands, in the context of a large conditional cash transfer program in rural Mexico. The model can explain the impacts of the program on the structure of food consumption. We use two plausible and novel distribution factors: the random allocation of a cash transfer to women and the relative size and wealth of the husband’s and wife’s family networks. Our structure does better at predicting the effect of exogenous increases in household income than an alternative, unitary, structure. We cannot reject efficiency of household decisions.

Work in Progress

Conditional Cash Transfers: Effects on Crime
with L. Cardona-Sosa, C. Meghir, and C. Posso (in Progress)

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Abstract: Available soon.

Long-run Spillover Effects of a Vocational Training Program for Disadvantaged Youth in Colombia
with L. Cardona-Sosa, S. Crossman, S. Krutikova, C. Medina, and C. Meghir (in Progress)

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Abstract: Available soon.