Does the reduction of poverty have to come with unavoidable environmental costs? False trade-off! In Indonesia, a Science paper by Ferraro and Simorangkir estimates that in about 7,500 forested villages the PKH conditional cash transfers program reduced tree cover losses by 30%. How did that happen? Via two channels, namely consumption smoothing (cash substitutes for deforestation as a form of insurance for low-income household) and consumption substitution (market-purchased goods substitute for deforestation-sourced consumption goods). But what is striking is not just its environmental sustainability, but also its financial one: the economic value from reduced carbon emissions alone could cover for PKH’s implementation costs!
A paper from Pakistan, however, somewhat curbs the environmental enthusiasm: Nawaz and Iqbal show that, on one hand, the BISP cash transfer program increases the use of modern fuels (electricity and gas); but on the other hand, it also boosts the share of fuel in household expenses (including from wood, coal, kerosene, etc.). They conclude that “… the expansion of the cash transfer program [requires] a reasonable investment in the energy sector to ensure an uninterrupted supply of modern fuels”. Bonus on Pakistan: a PIDE brief calls for rethinking BISP and make it more conditional.
A biggie is out: building on last year’s event on universal child benefits, Bastagli et al produced a great UNICEF-ODI report compiling key issues, options and evidence on child-related transfers (short briefing available here). The analysis identifies different program packages and examines them in light of rights, poverty, dignity, political economy and financing. On the latter, spending on child benefits ranges between 0.4-1.7% of GDP, while the cost ratio of reaching all children vs poor children only is between 1.4 in Africa to 14 in MENA. Among key messages, the report calls for “… approaches that are universalistic and in which some form of selectivity is used to direct additional benefits at particular disadvantaged or vulnerable groups – referred to as selectivity within universalism”. Bonus: Kidd and Athias updated their analysis critical of poverty targeting by adding four schemes (from Bangladesh, Colombia and Sri Lanka) to the previous assessment.
Since I mentioned universality, here are two new resources on UBI: in the US, Daruich and Fernández estimate that a universal transfer of $5500/year funded via new taxes could make current adults with lower skills better off; but future generations would be better off without such UBI (investments in ECD would give the opposite results). In India, Muralidharan outlines his vision for a post-Covid-19 social protection architecture, including complementing existing schemes with a UBI-type universal cash payment (‘inclusive growth dividend’) pegged at 1% of GDP.
From unconditional transfers to public works: what are the long-run effects of those programs for youth? Aizer et al present evidence from the US CCC public work schemes of 1940s and find that participants grew taller, lived longer, earned more, had higher education, and increased their nearby geographic mobility; however, neither labor force participation nor wages grew.
Speaking of long-term effects on youth, can cash transfers help young people make safe and healthy transitions into adulthood? TASAF et al released a longitudinal study on Tanzania exploring how transfers coupled with complementary services can achieve this. In general, results are quite sobering: impacts were positive on some dimensions (gender-equitable attitudes, and knowledge about HIV and reproductive health), but had no effects on a range of others like educational aspirations, schooling, economic participation, violence, health seeking, risky sexual behaviors, and mental health.
In a similar although slightly more positive vein, Roelen provide a comprehensive review of the state of the evidence on the role of graduation programs in ECD. They find positive effects on nutrition and health, but observe large evidence gaps around safety and security, caregiving and early learning.
Small design choices, like timing of an interview, can make a huge difference! A new study by Homonoff and Somerville shows estimates the costs of eligibility recertification for the US SNAP program: if the related interview is scheduled later in the month, 20% of people won’t attend. Effects? People get $600 less benefits the next year, and 1/4 of them remains off SNAP for over 1 year.
From design to delivery: there is lots of excitment around applying artificial intelligence to social protection; but what are the risks and opportunities with AI in cash transfers and other programs? A new GIZ-ADB report unbundles the issues in a balanced, crisp and accessible way (h/t Ralf Radermacher). Bonus: a fascinating paper by Hahn et al explores how the new payment technologies underpinning the US SNAP program could be made more equitable and inclusive.
s on the digital front: an IMF product by Una et al explores a broad range of digital governance solutions for emergency responses. As C19 is prompting further digitization of US services, what are people looking for online? A survey by Brown et al finds that “… respondents indicated that information about safety net programs was highly sought after“.
Since we are getting into jobs issues, do remittances spur growth? In most cases, yes! A cross-country review of 95 studies by Cazachevici et al reveals that 40% of those studies find positive effects, while only 20% show negative impacts (40% find no effect). However, positive effects only occur in Asia and not in Africa.
New research on the ‘missing middle’ – or how my colleague Truman Packard put it in a BBL this week, the ‘unobservable’ middle: two papers on South Africa, one by Johnson et al on options for C19 adaptations and another by Bassier et al examining how the country repurposed its social assistance system to support informal workers; an IDB report examines issues around the vulnerable middle class and informal workers in Bolivia, Colombia, Ecuador, and Peru (in Spanish) (h/t David Robalino); and a compelling UNICEF video on informal workers and C19 in Sri Lanka.
Two papers on lockdowns in low and middle-income countries! Alon et al suggest that “… blanket lockdowns are generally less effective in developing countries at reducing the welfare costs of the pandemic, saving fewer lives per unit of lost GDP. Age-specific lockdown policies, on the other hand, may be even more potent”. In another paper, Egger et argue that C19 lockdowns in Africa are a risky proposition. Why? Because of low levels of trust in government and limited technical lockdown readiness, resulting in a dangerous combo of difficult enforcement and possible tensions. Bonus on trust: Bruck et show that in C19 times, trust varies by people’s experience with the pandemic (“individuals who tend to worry less have higher trust than those who worry more”).
New estimates on the effects of C19 on poverty: Valensisi predicts that pending on lines and scenarios, poverty would increase between 68 and 200M people, while Decerf et al estimate 4.3 million years of life lost (see full paper here). And here is a counterintuitive, but logical argument put forward by Hamidi et al: pandemics are not deadlier in urban areas, but in low-density areas that have less access to quality health care.
What’s the effect of different types of taxes on poverty? Contrary to consensus, a paper by Bachas et al contends that consumption taxes are redistributive, lowering inequality by as much as personal income taxes. These effects are primarily driven by the shape of the informality Engel curve. As such “… subsidizing food cannot be justified on equity or efficiency grounds in several poor countries”.
Looking ahead, Acemoglu dusts off his crystal ball to peek at the future of the welfare state: “… at a time of unparalleled polarization, crumbling democratic norms, and dwindling institutional capacity, a reformed and renewed welfare state is a tall order indeed. But like the WWII generation, we have no other choice but to try”.
Semi-final assortment: in a short piece on social protection C19 responses, Gerard et al argue that “… in an emergency, the benefits from improving targeting and reducing leakages may not exceed the costs if an improved process leads to long delays in implementation”; a blog by Nikolova and Cnossen argues that the perceptions we hold about the meaningfulness of our jobs can actually have serious consequences for how we behave in the labor market; and check out the fantastic video by Chetty on the economic impacts of COVID-19 using private sector data (h/t Ruslan Yemtsov).
Final bonus: our global social protection Covid response paper (v.11) now comes with the accompanying Excel file available for download… enjoy the 847 rows and 114 columns of data!