Journal
AMERICAN ECONOMIC REVIEW
Volume 99, Issue 1, Pages 486-508Publisher
AMER ECONOMIC ASSOC
DOI: 10.1257/aer.99.1.486
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Cash transfers to eligible households indirectly increase the consumption of ineligible households living in the same villages. This effect operates through insurance and credit markets: ineligible households benefit from the transfers by receiving more gifts and loans and by reducing their savings. Thus, the transfers benefit the local economy, at large; looking only at the effect on the treated underestimates the impact. One should analyze the effects of this class of programs on the entire local economy, rather than on the treated only, and use a village-level randomization, rather than selecting treatment and control subjects from the same community.
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