Cash Transfers, Food Prices, and Nutrition Impacts on Ineligible Children

Can cash aid harm nonrecipients by raising local prices? We show that a household-targeted cash transfer in the Philippines increases the prices of perishable foods in some markets and raises stunting among nonbeneficiary children by 11 percentage points (34%). Impacts increase in the size of the village income shock and remoteness---and are sustained two and a half years after program introduction. Price effects from an experimental sample are confirmed with national expenditure surveys collected during program scale-up. Household-targeted cash transfers can thus generate local spillovers that undermine program goals. Selected geographic targeting may avoid price spillovers at moderate additional cost.

Automated summary

Cash aid programs in the Philippines can raise prices of perishable foods in local markets and have negative effects on the development of nonbeneficiary children. The impact is stronger in areas with larger income shocks and remote locations, and persists for two and a half years after the program is introduced. The price effects are confirmed by national expenditure surveys during program scale-up. Selected geographic targeting can help mitigate these price spillovers at a reasonable cost.