Conditional Cash Transfers for Education in Morocco


Conditional Cash Transfers (CCTs) have been shown to increase investments in education and health, but their standard features make them expensive. Researchers conducted a randomized evaluation of a cash transfer program in Morocco to estimate the impact on attendance and enrollment of a “labeled cash transfer” (LCT): a small cash transfer made to parents of school-aged children in poor rural communities, not conditional on school attendance but explicitly labeled as an education support program. The program led to large gains in school participation and adding conditionality and giving cash transfers to mothers rather than fathers made almost no difference.
 
Policy Issue: 
Around the world, conditional cash transfer (CCTs) programs have been shown to influence households’ investment decisions regarding education and increase school attendance and educational attainment. One potential drawback of CCTs, however, is that two of their standard features, targeting—the process of defining and identifying eligible recipients—and conditionality—the requirement that recipients take certain actions, such as sending their children to school in order to receive the transfer—make them expensive to administer. Moreover, targeting and conditionality can also lead to the exclusion of the poorest segments of the population; targeting systems have been shown to be imperfect, often excluding many poor households; and conditionality means that those who cannot meet the conditions do not receive any benefit. While there is evidence that conditionality increases attendance, it is unclear how stringent the conditions must be. Can a cash transfer that encourages school enrollment without an explicit attendance requirement provide the small nudge necessary to increase educational achievements among disadvantaged communities?
 
Context of the Evaluation: 
Morocco is a lower middle income country: it’s GDP per capita was about $3,000 in 2011. Education levels in the general population are relatively low and in 2011only about 56 percent of the adult population was literate. While the national primary school enrollment rate is high, the rural primary school completion rate was still below 60 percent in 2008. In order to address these issues, the Moroccan Higher Council of Education (CSE) together with the National Ministry of Education (MEN) launched a nation-wide cash transfer program to encourage parents to keep their children enrolled in school.
 
Details of the Intervention: 
Researchers partnered with the Government of Morocco to evaluate the Tayssir program, a two-year pilot designed to increase student participation in primary school. Tayssir, which means “facilitation” in Arabic, made cash payments to parents in program communities with children aged 6 to 15. Parents had to formally enroll each of their children into the program. The pilot took place in 320 rural primary school sectors in the poorest areas within five of Morocco’s sixteen regions. The Tayssir pilot included two versions of the program:
 
Labeled cash transfer (LCT):  In this version of the program, families with children of primary school age could receive transfers whether or not their children attended school. In practice, since enrollment in the Tayssir program happened at schools, children enrolled in Tayssir were automatically registered and enrolled in school at the same time, but the transfers were not conditional on continued enrollment. The monthly amount per child increased as each child progressed through school, starting from US$8 for each child in grades 1 and 2 and increasing to US$13 for children in grades 5 and 6. The average transfer amount represented about 5 percent of the average household’s monthly consumption, which is small compared to a range of 6 to 27 percent for existing CCTs in middle-income countries.
 
Conditional cash transfer (CCT): In this version of the program, cash transfers were disbursed to parents of primary school-age children, as long as their child did not miss school more than four times each month.  The monthly transfer amounts were the same as those in the LCT program.
 
What’s more, in order to determine if the effectiveness of the transfers depends on the gender of the parent who received the transfer (the child's mother or father), in half of the school sectors sampled for Tayssir, mothers (the recipients in almost all CCT programs to date) received the transfers; while fathers received the transfers in the other half.
 
Thus, each school sector sampled for the study was randomly assigned to one of five groups:
  • LCT to father group (40 school sectors, 80 communities sampled for study)
  • LCT to mother group (40 school sectors, 80 communities sampled for study)
  • CCT to father group (90 school sectors, 180 communities sampled for study)
  • CCT to mother group (90 school sectors, 180 communities sampled for study)
  • Comparison group: no transfers (60 school sectors, 120 communities sampled for study)
Researchers collected information on student attendance and enrollment status for over 47,000 primary school aged children through unannounced visits to all schools. Comprehensive baseline and endline surveys gathered data on around 4,400 households. At endline a basic test was administered to measure arithmetic performance of one child per household. Finally, awareness surveys were administered mid-course to measure teachers’ and parents understanding of the program. 
 
Results & Policy Lessons:
Geographical targeting, by removing any ambiguity on eligibility, allowed for large program take-up. Around 97% of the study households in either the LCT or CCT communities had at least one child enrolled. Compliance with the random assignment of the gender of the transfer recipient was very high: it was close to 89% on average in schools where mothers had been designated as recipients, and around 80% in schools where fathers had been.
 
In terms of school participation, the Tayssir cash transfers had large impacts under all versions of the program, with slightly larger impacts for the LCT. After two years, the dropout rate among students enrolled in school at the start of the program in LCT schools was about 7 percentage points lower than the dropout rate of comparison schools (at 10 percent), a 70 percent decrease. Re-enrollment of those who had dropped out of school before the program almost doubled in LCT schools as compared to comparison schools, and the share of students who never enrolled in school fell by 43 percent. Performance on a basic arithmetic test improved but not significantly.
 
There was no difference in impacts between transfers issued to fathers and transfers issued to mothers. Making cash transfers conditional did not improve the effectiveness of the program either. If anything, it somewhat reduced it: relative to LCT schools, CCT schools had a slightly higher drop-out rate. Among students who were not enrolled at the start of the program, re-enrollment in CCT schools was lower than re-enrollment in LCT schools, perhaps because conditionality discouraged some households or teachers from enrolling weaker children in the program. That said, the rules of the program were overall poorly understood by local communities. After one year, in the CCT groups, only about half of parents interviewed knew transfers were conditional; in the LCT groups, only about half of parents interviewed knew transfers were unconditional. A weak understanding of what households must do to qualify for the cash transfer naturally weakens the potential for conditionality to matter.
 
The finding that adding conditionality or directing the cash transfers to mothers did not increase the program’s impact on student attendance or school enrollment is important. It likely is because the Tayssir program was framed as an educational support program, and perceived as an endorsement of the local schools, since headmasters were responsible for enrolling families. Data from the household surveys provides evidence that Tayssir, in all forms, increased parents’ belief that education was a worthwhile investment.
 
Overall, the results of the Tayssir experiment suggest that in some contexts unconditional but labeled transfers targeted at poor communities can provide parents with the small nudge necessary to increase attendance. This “nudge” is relatively cheap, due to both small transfers per child and small administrative costs. 

Girls Scholarship Program in Kenya

Approximately 85% of primary school age children in western Kenya are enrolled, however only about one-third of students finish primary school. Dropout rates are typically higher for girls. Results suggest that the Girls Scholarship Program led to persistent test score gains in pupils from treatment schools five years after the program. Girls from treatment schools were also more likely to be enrolled in school and to have attended some secondary school at the time of the long-term follow up survey.

 
Policy Issue: 

In many education systems, those who perform well on exams covering the material of one level of education receive free or subsidized access to the next level of education. Such merit-based scholarships are attractive to the extent that they can induce greater student effort, assuming that pupils are motivated to strive for scholarship opportunities. However, the role of student motivation in improving education outcomes is relatively poorly understood. Policymakers have frequently focused their attention on increasing school inputs or improving teacher attendance, assuming that students are motivated to take advantage of these improvements. Merit-based scholarships for girls may offer an alternative to increase female education, and more educated women tend to have healthier children and higher incomes. However, the assumption that pupils are inherently motivated to pursue education, and the effect that educational opportunities can have on female learning, are relatively unexplored.

 
Context of the Evaluation: 

Approximately 85 percent of primary school age children in western Kenya are enrolled in school, but only about one-third of students finish primary school. Dropout rates are typically higher for girls; in 2001 the 6th grade dropout rate was 10 percent for girls and 7 percent for boys among students in this study’s comparison schools at baseline. Primary schools charge fees to cover their non-teacher costs, including textbooks for teachers, chalk, and classroom maintenance (approximately US$6.40 per family per year). There are also additional fees for school supplies, textbooks, uniforms, and activities such as taking exams, and these costs may deter parents from sending children, especially daughters, to school. This project was introduced in part to assist families of high-achieving girls to cover these costs.

 
Details of the Intervention: 

The Girls’ Scholarship Program (GSP) was carried out by International Child Support (ICS) Africa, in two rural Kenyan districts, Busia and Teso. Out of a set of 127 schools, 64 were randomly invited to participate in a program which gave merit-based scholarships to 6th grade girls who scored in the top 15 percent on tests administered by the Kenyan government. For the next two years, winning girls received: (1) a grant of US$6.40 to cover school fees, paid to her school; (2) a grant of US$12.80 for school supplies paid directly to her family; and (3) public recognition at a school awards assembly held for students, parents, teachers and local government officials.

Academic achievement was captured in test scores, which are likely to be a good objective measure, and was not significantly affected by cheating. Exams in Kenya are administered by outside monitors, and district records from those monitors have no documentation of cheating. 

 

Results and Policy Lessons: 

Implementation: Poor existing attitudes towards outside intervention and an educationally disadvantaged population meant that some schools in the Teso district were resistant to the program. Particularly, stronger indigenous religious beliefs and a tradition of suspicion of outsiders caused implementation difficulties, which may have reduced program effectiveness there.

Test Score Effects: The program raised test scores by 0.19 standard deviations for girls enrolled in schools eligible for the scholarship. These effects were strongest among students in Busia, where the program increased scores by 0.27 standard deviations. There are no effects found in Teso. Large positive test score gains were also found among Busia girls with low chances of winning the award, suggesting that there were positive externalities on learning. The average program effect for girls corresponds to an additional 0.2 grades worth of primary school learning, and these gains persisted one full year following the competition. There is also evidence of positive program externalities on the entire class; boys (who were ineligible for the awards) saw scores increase by 0.08 standard deviations on average. 

Student Attendance: While the program impact on school participation is nearly zero among girls in the pooled Busia and Teso sample, the impact in Busia is positive at 3.2 percentage points. This corresponds to about a one-quarter reduction in school absenteeism.

Teacher Attendance: The program had a large impact on overall teacher attendance; in the pooled Busia and Teso sample there was a 4.8 percentage point increase in overall teacher attendance, and if these attendance gains were concentrated only among 6th grade teachers then this would imply a 7.6 percentage point increase in attendance. Once again, effects were larger in Busia—the impact on overall teacher attendance there was 7.0 percentage points, roughly halving overall teacher absenteeism. Teachers could potentially be gaming the system by diverting their effort towards students eligible for the program, but there is no difference in how often girls are called on in class relative to boys in the program versus comparison schools, indicating that program school teachers probably did not substantially divert attention to girls. This finding suggests that greater teaching effort was directed to the class as a whole.

Merit Scholarships and Inequality: The scholarship award winners did tend to come from relatively advantaged households, raising concerns about the distribution of benefits from this program. But in terms of student test score performance, the positive externalities affected all students, and were not concentrated amongst the most privileged. 

Parental Involvement Effects: Anecdotal evidence from teacher interviews suggests greater parental monitoring occurred in Busia as a result of the program. One Busia teacher mentioned that parents began to “ask teachers to work hard so that [their daughters] can win more scholarships.” Another Busia teacher asserted that parents visited the school more frequently to check up on teachers, and to “encourage the pupils to put in more efforts.” When teachers were asked to rate local parental support for the program, 90 percent of Busia teachers claimed that parents were either “very” or “somewhat positive;” in Teso the analogous rate was only 58 percent. Thus, the greater improvements in both student and teacher attendance and performance in Busia as compared to Teso suggest that merit scholarships are most effective in the presence of local parental accountability and involvement, either formal or informal. 

Graduating the Ultra-Poor in Peru

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, in six countries researchers evaluated a multi-faceted approach aimed at “graduating” the ultra-poor from poverty. They found that generally the approach had long-lasting economic and self-employment impacts and that the long-run benefits outweighed their up-front costs. In Peru, the gains were smaller than in most other countries.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers coordinated to conduct six randomized evaluations in Ethiopia,  GhanaHondurasIndiaPakistan, and Peru.

Context of the Evaluation:

In Peru, researchers partnered with implementing organizations Plan International-Peru and Asociación Arariwa. The study focused on households in the rural communities of Canas and Acomayo, located in the department of Cusco, which is among the poorest departments in Peru.[1] To select the poorest members of the communities, the project team conducted a Participatory Wealth Ranking, in which villagers collectively ranked households according to their wealth during a community meeting. Asociación Arariwa conducted a short survey afterwards to verify the results of the ranking.

Details of the Intervention:

Researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra-poor in Peru. The approach was first developed by the Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries.

In Peru, an initial sample of 2,284 households was spread out across 86 villages. In half of the villages, households were randomized to either receive the program or not. The households that did not receive the program but had neighbors that did, served as a sub-comparison group to measure “spillover” effects.  The remaining 43 villages were randomly selected to be pure comparison villages (no one in the village received the program). The program consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer:One-time transfer of a productive asset valued at 1,200 PEN (2014 PPP US$854). Most participants (64 percent) chose guinea pigs, a quarter picked hens, and small number picked cattle (4 percent). 

2. Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3. Consumption support: Regular food support is a component of the Graduation approach, but in this study it was not unique to the treatment group. A governmental cash transfer program called Juntos already existed prior to the program. Households not enrolled in the Juntos program received monthly cash transfers of 100 PEN  (2014 PPP US$72). Households enrolled in Juntos (in both treatment and comparison groups) received cash transfers of 200 PEN (2014 PPP US$143.33) every two months from Juntos.

4: Health education: Information about nutrition, healthy practices, and prenatal health (delivered during training sessions).

5. Savings account:Households were encouraged to open savings accounts with Banco de Nacion or deposit group savings with Arariwa Microfinance.

6. Households visits: Home visits by Arariwa staff every six weeks over 24 months to provide to provide accountability, coaching, and encouragement.

The Graduation program began in early 2011 and continued until mid-2013. Researchers conducted the first endline survey after the program ended, as well as a second endline survey one year later (mid-2014).

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. However, for households that received the Graduation program in Peru, one year after the Graduation program ended the gains were smaller, compared to most other countries:

Economic impacts: Households that received the program saw an 8 percent increase in food consumption (to 2014 PPP US$82.05 a month on average), but no significant increases in non-food consumption or durable good expenditures. They did not experience a significant increase in assets or food security, though they saved 2014 PPP US$220.10 a month on average, 26 percent more than households in the comparison group.

Self-employment: Households that received the program earned 2014 PPP US$307.30 in revenue from livestock on average, a 16 percent increase relative to the comparison group, but they did not experience an increase in agricultural income. Nor did they spend any more time on productive activities than comparison group households.

Psychosocial wellbeing: Households in Peru reported being physically in better health and happier than households that did not receive the program.

Political Involvement:Households did not experience significant gains in political involvement or women’s empowerment in Peru relative to the comparison group. 

Cost-benefit analysis: Compared to less comprehensive interventions, the Graduation program had relatively high up-front costs. Researchers calculated total implementation and program costs to be US$2,604 per household in Peru (2014 PPP US$5,742). However, estimated benefits from consumption and assets growth amount to 2014 PPP US$8,380 per household, representing an overall 146 percent return.



[1] “Descriptive Statistics from the Extreme Poverty Graduation Program Baseline in Cusco, Peru.” October 2011. Accessed at: http://www.microfinancegateway.org/sites/default/files/publication_files/tup_peru-baseline_report_pdf.pdf

Graduating the Ultra-Poor in Honduras

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, researchers evaluated a globally implemented “Graduation” approach to measure its impact on the lives of the ultra-poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. Honduras was the only country where long-run benefits did not outweigh their up-front costs.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers coordinated to conduct six randomized evaluations in Ethiopia,  Ghana, Honduras, IndiaPakistan, and Peru.

Context of the Evaluation:

In Honduras, researchers partnered with PLAN International Honduras and Organización de Desarollo Empresarial Feminino Social (ODEF), a local microfinance institution. The study focused on poor households with children who were not generally receiving microcredit or development assistance. Those ultimately selected to participate were identified as the poorest members of the community through a participatory wealth ranking process. Within the sample, the median daily per capita consumption was 2014 PPP US$1.32, with 60 percent of households consuming less than US$1.25 per person per day. At the start of the study, around 40 percent of households reported that some adults sometimes had to skip meals, and 20 percent reported the same for children.

Details of the Intervention:

In partnership with PLAN International Honduras and ODEF, researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (called the "Graduation approach”) on the lives of the ultra-poor. This approach was first developed by Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. From a sample of 2,403 households, researchers randomly assigned one-third to the treatment group, and two-thirds to the comparison group, which would not receive the program.

The intervention consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer: Participants received a one-time transfer of a productive asset valued at 4,750 Honduran Lempiras (2014 PPP US$537). Most (83 percent) participants chose chickens, while 6 percent selected pigs and 5 percent selected fish.

2. Technical skills training: Household were trained in running a business and managing their chosen livelihood. For example, households who selected chickens were taught how to care for them, including feed and shelter requirements.

3. Consumption support: Households received a one-time food transfer worth 1,920 Honduran Lempiras (2014 PPP US$217) intended to cover the six-month lean season. This differed from most other countries, where participants received weekly or monthly cash stipends.

4. Savings: Households were required to open an ODEF savings account and received either savings matches or direct savings transfers.

5. Home visits: Program staff conducted weekly home visits to provide accountability, coaching, and encouragement.

6. Health: Households attended health, nutrition, and hygiene trainings.

The program began in 2009 and continued until 2011. Researchers conducted a first endline survey immediately after the program concluded,as well as a second endline survey around one year later.

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs.

General results: In Honduras, results varied significantly from overall findings: although livestock revenues increased, total and food consumption did not change, and asset ownership declined. Researchers believe this was primarily due to the fact that a large fraction of chickens, which most households received as their productive asset, died due to illness. At both the first and second endline surveys, treatment households reported an increase in revenue coming from chickens. However, most of the chickens had died by the time of the second endline survey, leading to a decline in overall assets owned relative to the comparison group, and there was no difference in consumption among households who participated in the Graduation program and those that did not.

Cost-benefit analysis: As the program did not have lasting positive impacts on consumption and asset holdings, Honduras was the only evaluated country in which the program’s costs outweighed participant benefits. Researchers calculated total implementation and program costs to be US$1,335 per household (2014 PPP US$3,090). Estimated (lack of) benefits for four years of consumption and assets declines amounted to a loss of 2014 PPP US$6,118 per household, representing an overall negative return of 198 percent.

The Impact of Unconditional Cash Transfers in Kenya

Unconditional cash transfers (UCTs) allow poor households the choice and flexibility of allocating resources to meet the needs they find most pressing. In Rarieda, Kenya, researchers conducted a randomized evaluation to measure the impact of GiveDirectly’s UCT program on poor rural households’ economic and psychological well-being. Results demonstrated that the program had significant welfare-improving impacts, both economically and psychologically, for transfer recipients.

Policy Issue:

Low-income households are often unable to make important welfare-improving investments, such as going to the doctor or investing in better farming technologies, because they lack the money to do so. One potential policy response is to provide money that enables households to make these productive investments. Existing research shows that conditional cash transfers (CCTs), which provide households with cash and incentivize certain investments or behaviors, can have important benefits for households’ welfare. However, there is less evidence about the impact of unconditional cash transfers (UCTs), which provide money unconditionally and are less costly to administer than CCTs because they don’t require the monitoring and follow-up. However, without any conditions, people may be less inclined to spend the money responsibly or on productive investments. To address these questions, researchers conducted a randomized evaluation in Rarieda, Kenya to measure the impact of GiveDirectly’s UCT program on poor rural households’ economic and psychological well-being.

Context of the Evaluation:

GiveDirectly, Inc. is an international NGO that makes unconditional cash transfers (UCT) to poor households in developing countries. Since 2011, the organization has operated in Kenya by providing UCTs to households in the country’s poorest regions through M-Pesa, a mobile phone-based money transfer service that is widely used throughout the country. This study took place in Rarieda, a predominantly rural and poor district in western Kenya.

Details of the Intervention:

Researchers conducted a randomized evaluation to measure the impact of GiveDirectly’s unconditional cash transfer program on poor rural households. Among 126 of the poorest villages in the district, 63 were randomly selected to receive the UCT, and 63 served as a comparison group. Within the 63 UCT villages, researchers identified 503 poor households living in a house with a thatched roof to receive a cash transfer. To measure whether transfers affected nearby households, researchers collected data on an additional “spillover” 505 households who did not receive a transfer but lived in the same village as households that did. In the 63 villages that did not receive any UCT program, 432 households served as a pure comparison group. Within the villages receiving the UCTs, researchers examined three design features:

·       Gender: The UCT was randomly assigned to either the female or male head-of-household.

·       Timing: The UCT was randomly assigned to be delivered either as a lump-sum amount of US$404, or as a series of nine monthly installments of US$45.

·       Size: 137 households were randomly assigned to receive an additional transfer of US$1,112 paid in seven monthly installments of US$160 each. In total, “large” transfer households received US$1,525, while “small” transfer households received US$404.

Researchers surveyed all households before the program began and approximately 4 months after the program ended.

Results and Policy Lessons:

Overall, GiveDirectly increased households’ assets, consumption, and food security. The program also improved psychological well-being, especially among households with female recipients and households that received the large transfer. GiveDirectly had no impact on health or education measures.

Economic impacts: GiveDirectly households significantly increased consumption by US$36.18 per month (23 percent), across a range of goods including food, medical and educational expenses, and social events. There was no increase in expenditures on temptation goods, such as alcohol and tobacco. Overall, the UCT had similar impacts regardless of transfer recipient and timing.

GiveDirectly households increased investments by US$278.52 (58.3 percent), in assets such as livestock, furniture, and metal roofs. GiveDirectly households were 23 percentage points more likely to have a non-thatched roof after the program, compared to 16 percent of households in the comparison group. Monthly-transfer recipients were less likely than lump-sum recipients to invest in these types of assets, suggesting that they were less able to save the UCT. Investments in income-generating activities (e.g., non-agricultural businesses and livestock) increased and revenues from these activities increased by US$16.64 per month (34 percent). However, estimated profits did not.

There were no effects on economic outcomes in spillover households compared to pure comparison villages, suggesting that the UCT had no major impact on the overall economic environment in GiveDirectly villages.

Psychological impacts: GiveDirectly households reported a 0.2 standard deviation increase (0.35 sd for large transfer recipients) on an index measuring psychological well-being. This improvement was largely driven by increases in happiness and life satisfaction, and reductions in stress and depression. There were no differences in self-reported measures between monthly-transfer and lump-sum recipients, but cortisol levels were significantly higher for monthly-transfer recipients. A potential explanation being that the monthly-transfer recipients seemed to have difficulty saving or investing the transfer, which may have led to increased stress.

Psychological well-being was 0.16 sd higher for GiveDirectly households with female recipients compared to GiveDirectly households with male recipients, driven largely by significantly lower cortisol levels; there were no other differences in outcomes among these households. One reason for this improvement in psychological well-being may be that female empowerment improved among these households (measured along indicators such as reduced domestic violence and increased female decision-making power), though results did not capture a significant increase on these measures. 

The Impact of Unconditional Cash Transfers on General Welfare and Local Public Finance in Kenya

Providing cash grants to the poor without any strings attached has been shown to have important welfare benefits for recipients, including significant increases in income, assets, psychological wellbeing, and female empowerment. Yet less is known about how this sudden influx of income affects the rest of the village, and in particular, the effects on non-recipients. In western Kenya, researchers are evaluating the impact of unconditional cash transfers, provided by GiveDirectly, on local economic activity, prices, household welfare, fundraising for public goods, and psychological well-being, both in communities where transfers are distributed and in neighboring areas.

Policy Issue:

Previous research has found that providing cash grants to the poor without any strings attached can have important welfare benefits for recipients, including significant increases in income, assets, psychological wellbeing, and female empowerment.1 Unconditional cash transfers, which have relatively low administration and procurement costs and allow recipients to identify their own needs, are quickly growing in popularity as a tool for poverty alleviation. Yet little is known about how this sudden influx of income affects the local economy, including non-recipients. Does the injection of funds stimulate wider economic activity or change the price of goods? Do the positive impacts spill over to non-recipients, or alternatively, do cash transfers have negative economic or psychological effects on those who do not receive cash as the result of higher prices or the perception of being relatively less well-off? Answering these questions will contribute to improving the design of cash transfer programs.

Context of the Evaluation:

The NGO GiveDirectly, the implementing partner in this study, provides large, unconditional cash transfers to poor households in rural Kenya. The unanticipated one-time transfers of approximately US$1,000 correspond to about one year of consumption for recipient households. While GiveDirectly has worked in Kenya since 2011, this study takes place in where the NGO has not worked before: three subcounties of Siaya County in western Kenya, rural areas bordering Lake Victoria.

In addition, Kenya offers a unique context to study the effects of cash transfers on local public finance. It has a long history of local fundraising for public goods through meetings called harambees, which may help facilitate the redistribution of income in villages.

Details of the Intervention:

Researchers are partnering with GiveDirectly to evaluate the impact of unconditional cash transfers on local economic activity, household welfare, fundraising for public goods, and psychological well-being in communities where transfers are distributed and in neighboring areas.

The randomized evaluation is taking place in 655 villages in rural Kenya. In order to identify the program’s effects both within villages and on nearby villages, researchers randomized on two levels: villages and sub-locations (administrative units of about 10 villages each, on average). In “high saturation” sub-locations, a greater number of villages are assigned to treatment status compared “low-saturation” sub-locations. Based on these proportions, villages within each sublocation were then randomly assigned to the treatment group, in which all eligible households received cash transfers, or to the comparison group.

Within treatment villages, GiveDirectly conducted a census to identify all households that met their eligibility criteria: living in a house with a grass-thatched roof. (Researchers conducted their own censuses in all villages to determine eligibility.) The eligible households in treatment villages received a series of three transfers totaling about US$1,000 via the mobile money platform M-PesaThis is a one-time program, and GiveDirectly will not provide additional financial assistance to households after the final transfer.

Researchers will measure changes in local economic activity, including household income, the number of enterprises, prices, public finance, and psychological wellbeing approximately one year after the transfers are complete.

Results and Policy Lessons:

Project ongoing; results forthcoming.

 


[1] Haushofer, Johannes, and Jeremy Shapiro. "Household response to income changes: Evidence from an unconditional cash transfer program in Kenya." Massachusetts Institute of Technology (2013).

 

Tablet-Based Financial Education

Numerous developing country governments, such as Brazil and Mexico, have adopted conditional cash transfer (CCT) programs as a social safety net, providing billions of dollars in transferred funds to millions of poor citizens. However, most of these recipients have no previous experience with formal financial products. To address this financial capability gap for beneficiaries of Más Familias en Acción (MFA)—Colombia’s government CCT program—Fundación Capital has designed LISTA, a tablet computer-based program founded on the notion of “freeing financial education”  or creating a learning process without the physical presence of a trainer. Researchers are collaborating with Fundación Capital and the Government of Colombia to conduct a randomized evaluation of LISTA to study its impact on financial knowledge and behavior.

Policy Issue:
Three-fourths of the newly banked global poor—an estimated 375 to 600 million people1—have never received any form of financial training and are left to make decisions that affect their financial futures with little help or formal instruction. As new services such as CCTs and mobile banking expand, this number is expected to grow. Traditional financial education programs may not be the answer, for randomized evaluations have found mixed results for these types of interventions in developing countries.2 And even when financial training does lead to improvements in financial practices and behavior, it is difficult to customize the curriculum to the needs, interests, and location of each participant in a cost-effective and scalable way. 
 
To address these challenges, Fundación Capital, a regional non-profit organization dedicated to reducing poverty through the management, design, and implementation of innovative projects, designed a tablet computer-based application founded on the notion of “freeing financial education,” i.e. designing a training process that does not require the physical presence of a trainer and can happen in the pupils’ (CCT recipients) homes. This allows them to study at their own pace and customize their learning by focusing on topics most relevant to them. It uses an approach that integrates audio, video, and gaming elements, in an attempt to overcome literacy barriers and make the experience more entertaining. This evaluation will test the impact of this tablet computer-based application on financial knowledge and attitudes along with informal and formal financial practices and products used by the CCT beneficiaries. If successful, it has the potential to be cost-effectively scaled to reach millions of newly banked individuals.
 
Context of the Evaluation: 
In Colombia, the Más Familias en Acción (MFA) program reaches 2.6 million poor and extremely poor   families. This includes households that rank lower than established thresholds on the national poverty index (SISBEN), families in extreme poverty, and victims of displacement caused by Colombia’s internal armed conflict. The cash transfers are provided through channels including ATMs, local agents, and mobile phone-based wallets. This intervention has been tailored for women participating in the MFA program,  and is being implemented and evaluated in medium-sized municipalities (populations ranging from 30,000 to 50,000) on the Atlantic and Pacific coasts, two of the poorest regions in Colombia where there are no other current financial education interventions.
 
Details of the Intervention:
Researchers and IPA are partnering   with Fundación Capital and the Government of Colombia to evaluate the impact of the LISTA application on financial attitudes, knowledge, and practices of the beneficiaries. The application lets users organize and visualize savings, expenses, and debt, and includes educational content and videos on topics such as budgeting and the MFA program. It also contains information and simulations about ATM use and other financial products as well as games about financial rules of thumb that can be played individually or in groups.
 
 60 municipalities were randomly assigned to a group:
  • Tablet-based financial education: In communities in this group, tablets will be distributed among líderes (leaders) of MFA to share with other intervention participants in their communities. Fundación Capital will hold an introductory session where leaders who agree to participate in the program set goals for the number of women they will help train with the tablet application during the tablet-rotation period. Each leader will have about two months to reach their goals, after which they will rotate the tablet and pass it along to a different leader in the community, allowing more households to be reached with a smaller number of tablets. A kit of printed materials will be distributed to LISTA users once they have completed the training which includes reminders of basic financial rules of thumb, a savings calendar, formats and templates for budgeting, and completion diplomas. The materials are designed to reinforce motivation for LISTA users, put in practice what they have learned in the application, and permit them to retain some physical and personalizable training material as a reference for when the tablet leaves their home.
    • SMS Reminders:  The group who receives the tablet intervention will be further randomized into two sub-groups. One sub-group will receive access to the tablet-based financial education application and printed materials only, while the other will also get text ‘reinforcement’ messages offering reminders and rules of thumb. These text messages will be sent for four months after the beneficiary’s leader group has completed tablet usage. The messages are designed to remind users at opportune times – e.g., just before or after a transfer payment – about the content of the LISTA application and printed kit. They will also inform the users specifically about the government-provided financial products available to them through the CCT program. 
  • Comparison group: Does not receive any training or reminders
The groups will be compared using administrative data including savings and transaction data, as well as survey data on financial knowledge, attitudes, and practices. Finally, telemetric tablet data will be used to explore the degree to which self-customization of the curriculum was linked to observed outcomes. 
 
Results and Policy Lessons:
Study ongoing, results forthcoming. 
 
 
1 Anamitra Deb and Mike Kubzansky. March 2012. Bridging the Gap: THE BUSINESS CASE FOR FINANCIAL CAPABILITY – Monitor and Citi Foundation.
2 Xu, L. and B. Zia. 2012. “Financial Literacy around the World. An Overview of the Evidence with Practical Suggestions for the Way Forward.” World Bank Policy Research Working Paper 6107.
 

Enterprises for Ultra-poor Women After War: The WINGS Program in Northern Uganda

What’s holding back impoverished women? Can small grants programs help the most vulnerable women develop sustainable livelihoods? Do employment and poverty relief empower them and improve their lives? This evaluation assessed the impact of a program that gave cash grants and basic business skills training to the poorest and most excluded women in post-war northern Uganda. The program led to dramatic increases in business and reductions in poverty. Despite these economic gains, however, there was little change in social integration, physical or mental health, or empowerment.

Find a policy note with more detail here and a full in-depth policy report here (PDFs)
 
Policy Issue:
According to one view, women have the ability to run businesses and make profits, but they are held back by too few assets, too little access to loans, too few skills, and a host of social barriers. What happens, then, when these economic barriers are removed? This study evaluates a program that gives cash, business skills training, and ongoing advising to some of the poorest women in the world, in northern Uganda, to understand its effect on new business development and poverty.
 
Another view holds that for women, with economic success comes empowerment - more independence, more decision-making power in the household, and the freedom to leave abusive relationships. This study also tests whether an entrepreneurship program that reduces poverty also empowers the women in other aspects of life.
 
Evaluation Context:
The study takes place in northern Uganda, which is emerging from twenty years of conflict and displacement. Young women and girls in particular suffered economically and educationally from the war. The women who participated in this study were displaced from their homes and lands for years, and are returning and rebuilding a life. Thus this study can inform strategies for post-war reconstruction for women and for the society in general.
 
In 2007, the NGO AVSI Uganda and two of the IPA Investigators surveyed more than 600 young females aged 14 to 35 affected by the conflict in northern Uganda, including more than 200 women formerly abducted by an armed group. The evidence from the survey, along with program experience among NGOs in northern Uganda, suggests that the development of new economic opportunities and building social capital will be crucial ingredients in reducing poverty and improving the health, education and psychosocial well-being of youth, especially young women. 
AVSI and the investigators worked together to design a program that would relieve the most serious economic constraints on women: The Women’s Income Generating Support (WINGS) program.
 
Description of the Intervention:
AVSI identified the 15 poorest and most vulnerable women in 120 villages that they wanted to support - 1800 in all. To each, they delivered WINGS’ three core components:
1.       Four days of business skills training (BST)
2.       An individual start-up grant of roughly $150
3.       Regular follow-up by trained community workers
Additional optional components of the program include group formation, training, and self-support; and spousal inclusion, training, and support. Based on records provided by AVSI, the total cost of the intervention is estimated at approximately $688 per person.
 
Evaluation Design:
The evaluation combined a randomized design with qualitative data collection. AVSI could help no more than 900 people in 60 villages at first - serving 900 already required them to triple their usual capacity. Thus AVSI and IPA held public lotteries with village leaders. 60 villages were selected to participate immediately, while the remaining 60 participated 18 months later. This design allowed for assessing 18-month impacts by comparing women in participating villages to those just about to receive the program.
 
Results:
Economically, the program was transformative. For example:
 
Cash Earnings: Earnings nearly doubled. For the average WINGS beneficiary, monthly cash income increased by UGX 16,211 to 32,692 UGX, a 98% increase over controls. In absolute terms, an increase of UGX 16,211 does not seem large (about $6.50 a month at market exchange rates). However, relative to the average income in the control group, UGX 16,481 ($6.60), it is huge. 
 
Consumption, Assets, and Savings: Participants in the WINGS program had a 33% increase in household spending, a value of UGX 11,741 ($4.72). There is also an increase in wealth, and the results imply that WINGS clients substantially increase their durable assets. Savings for program beneficiaries tripled on average, going from UGX 40,740 ($16.36) to UGX 169,862 ($68.22). 
 
These economic gains, however, were not matched by gains in health or empowerment. In fact, there was almost no effect on non-economic measures. For instance:
 
Physical and mental health: There was no significant difference in psychological distress. Women in both the program and comparison groups reported a reduction in psychological distress over time, which is not surprising because the overall quality of life in northern Uganda improved after war and displacement. Women in the WINGS group did not improve more or faster, however. If anything, they were sick about a half a day more in the previous month. 
 
Child investments: Woman are often targeted by anti-poverty programs because they are believed to be more likely than men to use the profits to benefit the household, especially children’s education and health. Women in the program spent slightly more on children’s health and education, but there was no corresponding improvement in children’s health status or school enrollment, at least after 18 months.
 
Empowerment: The conventional wisdom also assumes that lending to women will enhance their status in the household. Data from this study, however, showed no evidence of resulting empowerment for women in household decision-making, independence, gender attitudes, or rates of intimate partner violence. This pattern has been seen before, and is often referred to as the “impact-paradox.” 
 
Overall, the WINGS program impacted women’s economic standing significantly, but the data show that translating these gains into improvements in psychological health, physical health, or empowerment is more complex.
 
For more, you can read a first person account of the project on the Freakonomics Blog.

Ex-combatant Reintegration in Liberia

For post-conflict societies, the challenges of reintegrating ex-combatants and war-affected youth are likely to far outlast and outsize the formal demobilization, disarmament and reintegration (DDR) of ex-combatants. These programs, conducted in war’s immediate aftermath, form an important part of a policymaker’s post-conflict toolkit. While ex-combatants receive special policy attention, poor and underemployed men are also widely considered a threat to political stability.

Find a more detailed policy brief here (PDF) and the full paper here.
 
Context of the Evaluation:

In Liberia, where the bulk of the population is young, poor, and underemployed, many rural youth continue to make their living through unlawful activities, including unlicensed mining, rubber tapping, or logging. Many of them are ex-combatants, and some remain in loose armed group structures, doing the bidding of their wartime commanders. While the security situation has steadily improved since 2003, the government, the UN, and NGOs fear that these youth are a possible source of instability, particularly in hotspot regions where mining, rubber tapping, or logging and the allure of “fast money” attract young men from around the country. These youth may also be recruited into regional conflicts as mercenaries. Agriculture is and will continue to be a major source of employment and income for rural Liberians. The international NGO Landmine Action (LMA, now known as Action on Armed Violence) runs an innovative and intensive agricultural training program, targeting ex-combatants and other high-risk youth in rural hotspots.

Description of the Intervention:

The LMA program is broader and more intensive than most ex-combatant reintegration programs, and is designed to rectify some of the main failings of prior demobilization programs: it is oriented towards agriculture (the largest source of employment in Liberia); it provides both human and physical capital; and it integrates economic with psychosocial assistance. It also targets youth at natural resource hotspots that presented the most immediate security concerns.

LMA took youth selected for the program to residential agricultural training campuses, where they received 3-4 months of coursework and practical training in agriculture, basic literacy and numeracy training, psychosocial counseling; along with meals, clothing, basic medical care, and personal items. After the training, counselors facilitated graduates' re-entry with access to land in any community of their choice.  Graduates received a package of agricultural tools and supplies, valued at approximately US$200. The program's total cost is approximately $1,250 per youth, excluding the cost of constructing the campuses. The program was designed to give youth a sustainable and legal alternative to illegal resource extraction, ease their reintegration into society, reduce the risk of re-recruitment into crime and insurrection in the future, and to improve security in hotspot communities.

LMA recruited twice as many youth as it had space for in its programs, and researchers randomly assigned half of the youth to treatment (receiving the program), and half to a comparison group (not receiving the program). By comparing these two groups 18 months after the program, researchers can see the effect of the intervention on agricultural livelihoods, shifts from illicit to legal employment, poverty, social integration, aggression, and potential for future instability.  Despite massive migration, 93% of the youth were found at the time of the endline survey. The qualitative study included observation and a series of interviews with 50 of the youth.

Results and Policy Lessons:

Engagement in agriculture: More than a year after completion of the program, program participants are at least a quarter more likely than the control group to be engaged in agriculture, and 37% more likely to have sold crops. Interest in and positive attitudes toward farming are also significantly higher among program participants. 

Illicit activities:The program had little impact on rates of participation in illicit activities like mining, but those who participated in the program do spend fewer hours engaged in illicit activities, as agricultural hours seem to substitute somewhat for hours spent in illicit activities.

Income, expenditures, and wealth:  There was a sizable increase in average wealth from the program, especially in household durable assets, but no change in current income (last week and last month), savings or spending for the average program participant. Overall, the evidence suggests that cash cropping provides periodic windfalls from sales, and that these are mainly invested in durable assets (and not necessarily in agricultural inputs or equipment).  Qualitative observations also suggest that access to markets may have been an important constraint on success.

Social engagement, citizenship, and stability:  There were small but positive improvements across most measures of social engagement, citizenship, and stability. While not all of the estimated impacts are large enough to be statistically significant, they nevertheless suggest a small but broad-based reduction in alienation and some gains in stability. The evidence on aggression and crime, however, does not point to a significant reduction in illegal or aggressive behaviors among program participants.

Interest and mobilization into the election violence in Cote d’Ivoire:Conflict broke out in Cote d’Ivoire shortly before the launch of the program evaluation.  Self reported rates of interest in the violence and mobilization were fairly low among the sample population, but they were especially low among program participants – they tended to report a third less interest in or links to recruiters and recruitment activities. Given the difficulty of shifting such behaviors, these impacts of the program are regarded as extremely promising.

More information can be found in the policy brief here (PDF) and full paper here.

Northern Uganda Social Action Fund – Youth Opportunities Program

Youth unemployment is a persistent problem in the developing world, particularly in post-conflict settings, posing both economic and security issues. In growing, stable economies such as Uganda, what holds back youth from reaching their potential?  One theory suggests that youth unemployment is due primarily to the lack of sufficient capital to support entrepreneurship. If this is true, cash transfers or cheap credit could lead to a burst of self-employment. Evidence from other areas, such as studies on microcredit, suggests that alleviating these constraints with loans has little effect on earnings. In Northern Uganda, which is returning to peace after twenty years of war, the government’s Youth Opportunities Program offered cash transfers to groups of youth to increase employment and reduce conflict. Follow-up surveys two and four years later found a shift from agricultural work towards skilled trades and strong increases in income. Women in particular benefited from the cash transfers, with incomes of those in the program 84% higher than women who were not. There were no differences, however, in social outcomes such as community participation, aggression, and social cohesion.

See the full paper herea policy note for the World Bank here, and Chris Blattman’s blog discussion here.

Policy Question:
In developing countries, high unemployment - particularly among youth - is a pressing concern. Jobs, particularly higher-skilled labor and productive small enterprise, provide incomes and reduce poverty. For governments, transitioning from an economy based on small-scale agriculture to one based on entrepreneurship and production is critical for long-term growth. Employment is also seen as important for building social stability and political engagement in communities uprooted by long-term conflict.
 
One form of intervention offers cash in the hopes that youth will invest it in the training and assets to learn a trade or form a business. In the development community, anxiety persists over whether this is an effective approach: will youth with little or no financial or business training be able to direct the money towards successful long-term entrepreneurship?  Previous research also raises questions about the ability of women in particular to invest aid into increasing lifetime earnings, given occupational constraints and pressure to share windfalls.1
 
Uganda’s largest employment program sought to test if an intervention as simple as giving cash could help accomplish the country’s long-term economic and social goals for its youth.
 
Context of the Evaluation:
Twenty years of insurgency, instability and conflict led to high rates of poverty and unemployment in northern Uganda, but by 2005 a measure of peace and stability had returned to the region. The centerpiece of the post-conflict recovery plan was a decentralized development program, the Northern Uganda Social Action Fund (NUSAF). In 2006, to stimulate employment growth through self-employment, the government launched a new NUSAF component: the Youth Opportunities Program (YOP), which provided cash transfers to groups of young adults with the goal of encouraging trade-based self-employment. 
 
Description of the Intervention:
The YOP intervention had two official aims: to raise youth incomes and employment and to improve community reconciliation and reduce conflict. The program, targeted at youth from ages 16 to 35, required young adults from the same town or village to organize into groups and submit a proposal for a cash transfer to pay for: (i) fees at a local technical or vocational training institute of their choosing, and (ii) tools and materials for practicing a craft.
 
The average applicant group had 22 members. Group cash transfers averaged nearly UGX 12.8 million (US$7,108), and varied by both group size and group request. The average transfer size per member was UGX 673,026 (US$374) – more than 20 times the average monthly income of the youth at the time of the baseline survey.
 
Due to vast oversubscription, the 535 eligible groups were selected at random, using a lottery, to either receive the YOP program or be part of the comparison group. A baseline survey was conducted with 2601 individuals in 2008, and 87 percent were successfully followed and interviewed in the endline surveys two and four years later.
 
Results and Policy Lessons:
Overall, the program seemed to have strong economic effects. Four years later, beneficiaries of the YOP program had 41% higher income and were 65% more likely to practice a skilled trade, such as carpentry, metalworking, tailoring, or hairstyling. Hours worked were 17% higher, nearly entirely accounted for by these new professions – while most still farmed part-time, hours spent in agriculture were not different. They were also 40% more likely to keep records, register their business, and pay taxes.
 
Within the sample, gains were highest for those who had the highest initial credit constraints, those with fewest initial assets and access to loans. The effects were particularly strong for women. Women who received the cash grants four years later had 84% higher incomes than women who did not, while men were earning 31% more than their counterparts in the comparison group. This gender difference may reflect particular capital constraints faced by women.
 
While employment programs including this one are often implemented by governments with the aim of reducing social instability or promoting cohesion, the data show no evidence for impacts in these domains. After four years there were no measurable differences in cohesion, aggression, or community and political participation between participants in the YOP program and those in the comparison group.
 
Overall, the data show that the poor used the money effectively; investing in training and tools needed to start businesses and experienced a significant growth in income, even after four years. Even though impacts in social domains were negligible, the economic outcomes show the potential of alleviating capital constraints for spurring economic growth among the poor. 
 
Read the full paper here.
 
A midterm policy report here and policy note by the World Bank here were based on the initial 2-year follow up data.
 
[1] Fafchamps, M., McKenzie, D., Quinn, S., Woodruff, C., 2011. When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana. Unpublished working paper.

Graduating the Ultra Poor in Pakistan

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, in six countries researchers evaluated a multi-faceted approach aimed at improving long term income of the ultra poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. Here we summarize the Pakistan site, which had similar effects as the other successful sites.

Policy Issue:

More than a billion people live on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers conducted six randomized evaluations in Ethiopia,  GhanaHondurasIndia, Pakistan, and Peru.

Context of the Evaluation:

This study took place in the Coastal Sindh region of Pakistan. To implement the Graduation program, researchers partnered with Aga Khan Planning and Building Services Pakistan, Badin Rural Development Society, Indus Earth Trust, and Sindh Agricultural and Forestry Workers Coordinating Organization, who jointly implemented the Graduation program under the leadership and funding of Pakistan Poverty Alleviation Fund. To select the poorest members of the communities, the project team conducted a Participatory Wealth Ranking, in which villagers collectively ranked households according to their wealth during a community meeting. The ranking process was followed by a short survey to verify the results.

Details of the Intervention:

Researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra poor in Pakistan. The approach was first developed by the Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. From a sample of 1,299 households, researchers randomly assigned half to the treatment group, and half to the comparison group, which was not be eligible to receive the program.

The Graduation program consisted of six complementary components, each designed to address specific constraints facing ultra-poor households.

1.     Productive asset transfer: One-time transfer of a productive asset valued at 15,000 Pakistan rupees (2014 PPP US$1043.33). More than half of the households picked goats as their asset, while 11 percent chose to open shops, and 10 percent picked hens.

2.     Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3.     Consumption support: Monthly cash transfers of 1,000 Pakistan rupees (2014 PPP US$69.56) for the first year in the program.

4.     Health: Female health visitors provided basic health services including checkups, health and hygiene training, and medicine. More difficult and serious cases were referred to the nearest doctor.

5.     5. Savings account: Encouragement to save money at home, in boxes, or with Rotating Savings and Credit Associations (ROSCAs)

6.     6. Households visits: Weekly visits by local NGO staff for 24 months to provide to provide accountability, coaching, and encouragement. In some cases, these visits were reduced to a bi-weekly or monthly basis.

Researchers conducted the first endline survey immediately after the two-year program ended, as well as a second endline survey approximately 12 months later, a year after all program activities ended.

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. In Pakistan, households that received the Graduation program experienced positive impacts in most areas:

Economic impacts:Average total monthly consumption among treatment households was 2014 PPP US$91.08, a 7 percent increase compared to the comparison group, while food consumption did not increase significantly.Households saw a 29 percent increase in the value of their total assets on average (valued, on average, at 2014 PPP US$1,188 as compared to comparison households’ average asset value of 2014 PPP US$918.00). Unlike in any of the other countries, in Pakistan households in the program borrowed significantly less than households in the comparison group.

Self-employment: Households experienced a 62 percent increase in revenue from livestock (to 2014 PPP US$70.50 a month) on average, but they did not experience significant gains in agricultural income or non-farm income, nor did they report any significant changes in how they allocated their time.

Psychosocial wellbeing: Households that participated in the program did not report feeling significantly happier or in any better health than those who did not participate.

Political involvement: Political involvement increased by one measure among participants in Pakistan; they were 31 percent more likely to be a member of a political party one year after the program ended. Women in treatment households did not experience any significant, lasting gains in empowerment.

Cost-benefit analysis: Compared to less comprehensive interventions, the Graduation program had relatively high up-front costs.Researchers calculated total implementation and program costs to be US$864 per household in Pakistan (2014 PPP US$5,962). However, estimated benefits from consumption and assets growth amount to 2014 PPP US$10,678 per household, representing an overall 179 percent return.

 

Graduating the Ultra-Poor in Ethiopia

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, researchers evaluated a globally implemented “Graduation” approach to measure its impact on the lives of the ultra-poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits outweighed their up-front costs. Here we summarize the Ethiopia site, which had similar effects as the other successful sites.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers coordinated to conduct six randomized evaluations in  Ethiopia,  GhanaHondurasIndiaPakistan, and Peru.

Context of the Evaluation:

In Ethiopia, researchers partnered with the Relief Society of Tigray (REST) and the Dedebit Credit and Savings Institution (DECSI). The study focused on participants in Ethiopia’s food-for-work program who belonged to households without any outstanding loans and with at least one member capable of work. A local food security task force narrowed eligibility further by choosing those they considered to be the poorest members of their community. Within the sample, the median total per capita consumption was 2014 PPP US$1.22 per day, with two-thirds of households consuming less than US$1.25 per day. Two-thirds of households reported that not everyone in the household got enough food.

Details of the Intervention:

In partnership with local implementing organization REST and microfinance institution DECSI, researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra-poor. This approach was first developed by Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. From a sample of 925 households, researchers randomly assigned half to the treatment group, and half to the comparison group, which would not be eligible to receive the program.

The intervention consisted of five complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer: One-time transfer of a productive asset valued at 4,724 Birr (2014 PPP US$1,228). Most (62 percent) of participants chose sheep and goats, while 24 percent selected oxen and 10 percent selected bees.

2. Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3. Consumption support: Regular food support is a component of the Graduation approach, but in this study it was not unique to the treatment group. The entire sample received food support (valued at a maximum 2014 PPP US$26 per month) through a separate food-for-work program.

4. Savings: Households had DECSI bank accounts opened and were required to regularly deposit savings totaling 4,724 Birr (2014 PPP US$1,228) over the two years of the program; households were unable to withdraw funds until they reached this threshold.

5. Home visits: Weekly home visits by REST staff to provide accountability, coaching, and encouragement.

The Graduation program began in 2010 and continued until May 2012. Researchers conducted a first endline survey immediately after the program ended, as well as a second endline survey around one year later.

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. In Ethiopia, specifically, researchers found similar effects:

Economic impacts: One year after the Graduation program ended, average total monthly consumption among treatment households was 2014 PPP US$47.50, an 18.2 percent increase over households in the comparison group. Food and durable goods spending were also higher than in the comparison group, and more households reported having enough food every day. An asset analysis also revealed larger values for both productive and household assets a year after the program ended. Treatment households had 2014 PPP US$2,657 in total asset values, 68 percent more than comparison group households. For treatment group households, measures of financial inclusion also increased. Graduation program households reported borrowing and saving at higher rates than comparison group households, with a 372 percent increase in average total savings to 2014 PPP US$345.

Self-employment:One year after the Graduation program ended, treatment group households reported spending 43 minutes per day on productive activities in addition to the average four hours among comparison group households. Graduation households also experienced a two-fold increase in livestock revenue relative to comparison group households.

Psychosocial wellbeing:Generally, the Graduation program did not affect measures of physical or mental health. There were no changes in illness, happiness, or stress, although treatment group households did report a smaller likelihood of feeling anxious or worried in the last year.

Political Involvement:There is some evidence that participation in the Graduation program increased political involvement. One year after the program ended, 38 percent of treatment group households reported being a member of a political party (compared to 33 percent for the comparison group) and 57 percent attended a village meeting in the last year (compared to 52 percent for the comparison group). Participation in the Graduation program did not improve women’s decision-making power.

Cost-benefit analysis: Researchers calculated total implementation and program costs to be US$884 per household (2014 PPP US$4,157). However, estimated benefits of consumption and assets growth amount to 2014 PPP US$10,805 per household, representing an overall 260 percent return on investment.

 

 

Graduating the Ultra-Poor in Ghana

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, in six countries researchers evaluated a multi-faceted approach aimed at “graduating” the ultra-poor from poverty. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. Here we summarize the Ghana site, which had similar effects as the other successful sites.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers conducted six randomized evaluations in Ethiopia,  Ghana, HondurasIndiaPakistan, and Peru.

Context of the Evaluation:

In Ghana, researchers partnered with implementing organizations Innovations for Poverty Action and Presbyterian Agricultural Services (PAS). The study took place in in the Northern and Upper East regions of Ghana, a region that is disproportionately poorer than the coastal south. Fifty-three percent of households in the study were living on US$1.25 a day or less when the study began, compared to 29 percent in Ghana as a whole. 

To select the poorest members of the communities, the project team conducted a Participatory Wealth Ranking, in which villagers collectively ranked households according to their wealth during a community meeting. PAS conducted a short survey afterwards to verify the results of the ranking.

Details of the Intervention:

Researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra-poor in northern Ghana. The approach was first developed by the Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. The Graduation program consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

In Ghana, researchers first randomly assigned villages composed of a total of 2,606 households, to one of two groups. One group served as a pure comparison group and was not offered the program. In the other group, 666 households were randomly assigned to receive the program. The other half of the households in that group did not receive the program, and served as a sub-comparison group to measure “spillover” effects on non-participating households living nearby. The program consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer:One-time transfer of a productive asset valued at GHS 300

(2014 PPP US$451). Forty-four percent of participants chose goats and hens, roughly a quarter picked goats and maize inputs, and small number picked shea nuts and hens (6 percent). 

2. Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3. Consumption support: During the lean season (14 out of 24 months), households received weekly cash transfers of GHS 4-6 (2014 PPP US$6.02- 9.03), depending on household size.
4. Health: Households were enrolled in the National Health Insurance Scheme and received health and nutrition education.                                                                                                  5. Savings account: Half of the Graduation households received savings accounts through the Savings Out of Ultra Poverty (SOUP) program, also implemented by PAS. When PAS staff  made their weekly visits, they collected deposits and households logged deposits.                       6. Households visits: Weekly visits by PAS staff to provide to provide accountability, coaching, and encouragement.

In order to test the relative effectiveness of the savings and asset transfer component, the researchers also randomly assigned a portion of households (733 households) to only receive the SOUP program, while another portion (329 households) only received the asset transfer component of the program. Half of those in the SOUP program (362 households) received a 50 percent match on their savings to test the impact of incentives to save.

Researchers conducted the first endline survey immediately after the two-year program ended, as well as a second endline survey around one year later.

Results and Policy Lessons:

Note: Results forthcoming from the relative effectiveness of the savings component (with and without incentives) and an asset transfer-only treatment.

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. In Ghana, households that received the Graduation program saw similar effects one year after the program ended:

Economic impacts: Average total monthly consumption among treatment households was 2014 PPP US$33.62, an 11 percent increase over households in the comparison group. They spent $22.41 on food every month on average, 12 percent more than the comparison group.Households saw significant increases in asset holding and borrowed 58 percent more than those in the comparison group (2014 PPP US$35.60 monthly average), They also saved 2014 PPP US$16 a month on average, which was three times more than households in the comparison group.

Self-employment:Households experienced a 91 percent increase in non-farm income, earning 2014 PPP US$12.86 on average, as well as significant gains in livestock revenue, earning 2014 PPP US$40.60 a month on average, or 50 percent more than the comparison group.

Psychosocial wellbeing:Households that participated in the program did not report feeling significantly less stressed or happier than households in the comparison group.

Political involvement:Women in treatment households did not experience significant gains in empowerment in Ghana, and in fact experienced significantly less power in decisions about food in the household. However, treatment households did participate in more community meetings than those in the comparison group.  

Cost-benefit analysis:. Researchers calculated total implementation and program costs to be US$1,777 per household (2014 PPP US$5,408). However, estimated benefits of consumption and assets growth amount to 2014 PPP US$7,175 per household, representing an overall 133 percent return on investment.

Graduating the Ultra-Poor in India

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, researchers evaluated a globally-implemented “Graduation” approach to measure its impact on the lives of the ultra-poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. Here we summarize the India site, which had similar effects as the other successful sites.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers coordinated to conduct six randomized evaluations in Ethiopia,  GhanaHonduras, India, Pakistan, and Peru.

Context of the Evaluation:

In India, researchers partnered with Bandhan, a local microfinance institution. The study focused on households with an able-bodied woman that were not associated with any microfinance institution and received below a certain threshold of government aid. Households commonly had little land, no non-land productive assets, and relied on informal labor for income. Bandhan further narrowed eligibility by conducting a participatory rural appraisal to identify the poorest community members. Within the sample, the median total per capita consumption was 2014 PPP US$1.15 per day, with 73 percent of households consuming less than US$1.25 per day. Around 90 percent of households reported that some adults sometimes had to skip meals, and 40 percent reported the same for children.

Details of the Intervention:

In partnership with Bandhan, researchers conducted a randomized evaluation to test the impact of an 18-month comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra-poor. This approach was first developed by Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. From a sample of 978households, researchers randomly assigned 512 to the treatment group and the remaining 466 to the comparison group, which would not receive the program. Of those offered the Graduation program, around half of all households accepted.

The intervention consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer: One-time transfer of a productive asset valued at Rs. 4,500 (2014 PPP US$437). A majority of participants chose goats, while 30 percent selected cows and 11 percent opted for nonfarm micro-enterprise inventory.

2. Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3. Consumption support: Households received weekly cash transfers of Rs. 90 (2014 PPP US$9) for 13 to 40 weeks, depending on the productive asset chosen

4. Savings: Households were required to save Rs. 10 (2014 PPP US$1) per week

5. Home visits: Weekly home visits by Bandhan staff to provide accountability, coaching, and encouragement.

6. Health: During weekly home visits, Bandhan staff discussed health matters.

The 18-month Graduation program was rolled out in 2007 and 2008 and ended between 2008 and 2010. Researchers surveyed participants immediately after the program concluded and one year later.

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. In India, specifically, researchers found similar effects:

Economic impacts: One year after the Graduation program ended, average total monthly consumption among treatment households was 2014 PPP US$63.68, a 11 percent increase over households in the comparison group. Food spending was also higher than in the comparison group, and more households reported having enough food every day. Ownership of household and productive assets also increased significantly among Graduation program participants. For treatment group households, measures of financial inclusion also increased. Researchers were unable to collect savings data. However, significantly more Graduation program households reported borrowing from formal sources than those in the comparison group, with no change in borrowing rates from informal sources.

Self-employment: One year after the Graduation program ended, treatment group households reported spending 25 minutes more per day on productive activities than the average 3 hours 45 minutes among comparison group households. Graduation households also experienced a nearly four-fold increase in livestock revenue relative to comparison group households.

Psychosocial wellbeing: The Graduation program did not affect measures of physical or mental health. There were no changes in illness, happiness, stress, or likelihood of feeling anxious or worried in the last year.

Political Involvement: There is some evidence that participation in the Graduation program increased political involvement. One year after the program ended, 55 percent of treatment group households reported voting in the last election (compared to 48 percent of the comparison group) and 49 percent reported voicing concerns with their village leaders in the past year (compared to 44 percent in the comparison group).

Cost-benefit analysis: Compared to less comprehensive interventions, the Graduation program had relatively high up-front costs. Researchers calculated total implementation and program costs to be US$330 per household (2014 PPP US$ 1,455). However, estimated benefits from consumption and asset growth amount to 2014 PPP US$6,298 per household, representing an overall 433 percent return.

The Impact of Cognitive Behavior Therapy and Cash Transfers on High-Risk Young Men in Liberia

In many fragile states, poor young men with limited economic opportunities drive high rates of crime and violence, and are easily mobilized into destructive activities such as rioting and rebellion. A large body of largely observational evidence in psychology research in the United States demonstrates that cognitive behavior therapy (CBT), a therapeutic approach to improving a wide range of harmful beliefs and behaviors, is an effective way to reduce violence and criminality among children and adolescents. To understand the potential effectiveness of CBT among adults in fragile states, researchers evaluated the impact of a short-term CBT program and the distribution of unconditional cash transfers on the behavior of high-risk young men in Liberia. Results demonstrate that CBT reduced criminal behavior and improved self-control and self-image among participants; these results were greater for participants who received both CBT and cash grants, but cash grants alone had no impact.

Find a four-page policy brief here, and the full paper here.
 

Policy Issue:

In many fragile states, poor young men with limited economic opportunities drive high rates of crime and violence, and are easily mobilized into destructive activities such as rioting and rebellion. For weak governments, these young men often pose one of the greatest risks to stability and economic growth. A large body of largely observational psychology research and experience in the United States suggests that cognitive behavior therapy (CBT), a therapeutic approach to improving a wide range of harmful beliefs and behaviors, is likely an effective way to reduce violence and criminality among children and adolescents. However, less evidence exists on the impacts of CBT on adults, or in other country contexts. To understand the potential effectiveness of CBT among adults in fragile states, researchers evaluated the impact of a short-term CBT program and the distribution of unconditional cash transfers on the behavior of high-risk young men in Liberia.

Context of the Evaluation:

In the past three decades, Liberia suffered two civil wars that killed ten percent of the population, displaced a majority, and recruited tens of thousands of people into combat. Though the last armed conflict ended in 2003, the country still remains very poor; most young men have limited employment, and so some turn to criminal activity. The men who were targeted and participated in this study were considered at highest risk for this type of criminal or violent behavior. The sample enrolled in the CBT program had an average of eight years of schooling and earned about US$68 in the past month working 46 hours per week (mainly in low skilled labor and illicit work). Thirty-eight percent were former members of an armed group, and 24 percent were homeless.

Details of the Intervention: 

Researchers conducted a randomized evaluation to measure the impact of the Sustainable Transformation of Youth in Liberia program (STYL), a short-term CBT program targeting high-risk young men to reduce destructive behaviors, such as criminality and substance abuse. STYL was developed organically over the past ten years by the Network for Empowerment and Progressive Initiatives, a local organization led by reformed combatants and other formerly high risk youth. Among a random sample of 999 young men living in Monrovia, half were randomly enrolled in STYL.

The eight-week STYL program combined frequent group therapy sessions with one-on-one counseling, conducted by program facilitators who were graduates of a previous STYL program. Through a combination of discussion, reflection, and practical homework assignments, the program aimed to improve participants’ self-image and self-control. Participants were given lunch during session days to compensate for time spent in session.

Researchers also examined the impact of unconditional cash transfers on the young men’s behaviors and beliefs. Shortly after the therapy program ended, another random half of the 999 young men received one-time unconditional cash grants of US$200. Thus, one group of the men received cash, a second group received therapy, a third group received both cash and therapy, and a fourth comparison group received nothing.

To measure both short- and longer-term impacts on participants’ beliefs, behaviors, and economic outcomes, researchers conducted follow-up surveys two and five weeks, and twelve and thirteen months after the cash grants were distributed. Since most data were self-reported, they validated the behavior of a subsample with intensive qualitative observation.

Results and Policy Lessons:

STYL participation had large and significant impacts on participants’ behaviors and beliefs, both in the short and long term. This effect was even greater for participants who received both the therapy and the cash grant. The cash grant alone had no behavioral effect on participants. Neither the therapy nor the cash grant impacted long-term economic outcomes.

Behaviors and beliefs

Receiving therapy with or without the cash reduced the likelihood of aggressive and criminal behavior among participants. Those who received therapy were 8.6 percentage points (55 percent) less likely to carry a weapon and 8.0 percentage points (47 percent) less likely to sell drugs in the short term, relative to the comparison group. These reductions persisted over the long term, and were even greater for individuals who received both the cash and therapy. In the long term, those who received both therapy and cash reported conducting 0.72  (38 percent) fewer thefts in the past two weeks.

Receiving therapy with or without the cash also improved some measures of self-control and self-image. On an index assessing impulsive behavior, therapy recipients reported a long-term reduction in impulsivity of 0.17 standard deviations and those who received therapy and cash reported a reduction of 0.21 standard deviations. Those who received both therapy and cash also reported a long-run improvement on an index measuring self-esteem of 0.19 standard deviations. These are large changes by the standards of most therapeutic interventions.

Economic outcomes

Receiving therapy had no impact on the usage of the cash grant. Regardless of receiving therapy, cash recipients reported using roughly a quarter of the grant on consumption and rent, a quarter on business investments, and about one-fifth on savings and debt payments. Only 4 percent of the grant was allocated to drugs, alcohol, and other temptation goods.

The cash grants increased recipients’ short-term incomes and business investments, relative to those who did not receive cash grants, but these effects did not persist into the long run. In the short term, cash recipients invested approximately US$57 more on average in their businesses, and weekly business profits increased by US$4.40, or 30 percent. Interviews with participants suggested that at least part of the reason they were not able to sustain these profits in the long run was due to insecure property rights. At each survey round, about 70 percent of the men reported a robbery or stolen belongings in the past month.

These results demonstrate that cognitive behavior therapy, combined with unconditional cash transfers, can be an effective method of reducing criminality, violence, and drug use. The program was fairly low cost, at US$530 per participant, suggesting that this program could be implemented on a larger scale.

Media coverage of this project:

Chris Blattman writes on The Washington Post Monkey Cage Blog.

Chris Blattman Talks with NPR's Planet Money team here.

Chris Blattman and Paul Niehaus in Foreign Affairs here.

Jason Margolis interviews ex-combatants and researchers Tricia Gonwa and Chris Blattman.

Improving the Design of Conditional Transfer Programs: Evidence from a Randomized Education Experiment in Colombia

Policy Issue: 
Over the past decade many developing countries have expanded primary school access, energized by initiatives such as the United Nations Millennium Development Goals, which call for achieving universal primary education by 2015. High student absenteeism is a considerable challenge, however, since families can face many barriers and opportunity costs in sending their children to school. School enrollment issues are thought to be more pronounced among girls, low income families and older children. Despite the importance of education, academics and policy makers are still far from understanding what determines whether or for how long children are educated. Conditional cash transfer programs have proven effective at improving education outcomes in some settings (notably Mexico's PROGRESA/Oportunidades program); however their impact on other goals and in other environments may be very different
 
Context of the Evaluation: 
Colombia is a relatively typical middle-income, Latin American country. Child mortality is relatively low at 21 per 1,000 births, and only 18 percent of the population lives on less than two dollars a day. Similar to many middle-income countries, school attendance in Colombia is close to 100 percent for younger children, but declines substantially after the age of 13. Average attendance is 92 percent among 15 year olds, 90 percent among 16 year olds, and 80 percent among 17 year olds. The drop is considerably faster for low-income individuals: by age 17 the attendance rate falls to 65 percent in this group. Moreover, in 2003, individuals from the bottom of the Colombian poverty index represented nearly 74 percent of those not properly enrolled in school. The primary reason cited for dropping out is the cost of education. Students must pay to enroll each year and pay for required items like uniforms, books, and supplies. Monthly education costs fluctuate between US$13 and US$22 – a relatively large expense considering that the poorest families in Bogota earn less than US$750 a year.
 
Details of the Intervention: 
In 2005, the city of Bogota established the Conditional Subsidies for School Attendance (“Subsidios Condicionados a la Asistencia Escolar”) program in an effort to improve student retention, lower drop-out rates and reduce child labor. Three different incentive structures for a new conditional cash transfer system (Subsidios) were piloted in two localities within the city:
 
Basic model: Participants received US$15 per month, conditional on the child attending school at least 80 percent of the required days that month. The total annual value of the transfer (US$150) is three times more than students’ reported average labor market earnings, and is slightly more than the average annual reported education expenditure (US$125). Students were removed from the program if they failed to reach the next grade twice, failed to meet the attendance target in two successive periods, or were expelled from school.
 
Savings treatment: This variant alters the timing of cash transfers by saving a portion of the monthly stipend on a bank account to be paid out at once. The monthly US$15, which is still conditional on an 80 percent attendance rate, is split into a direct payment of US$10 and a ‘savings’ component of US$5 which is held in a bank account. The accumulated funds are made available to families at the end of the year, just before enrollment for the subsequent grade level. This one-time payment of accumulated savings is unconditional on further attendance rates, i.e. once a child has met the attendance target in one month, the banked US$5 will be paid to the family at the end of the year regardless of attendance in future months. This structure creates a mechanism for families to save money for annual enrollment costs which might otherwise be an obstacle to students’ continuing from one grade level to the next.
 
Tertiary treatment: In addition to providing an incentive to attend school, this treatment provided incentives to graduate and then to matriculate to a higher education institution. Like in the savings treatment, in the short term, the monthly subsidy is reduced from US$15 to $10. However, upon graduating, students earned the right to receive a transfer of US$300, equivalent to 73 percent of the average cost of a year at vocational school, if they enrolled in a higher educational institution within one year.
 
Results and Policy Lessons: 
By conducting two different experiments, this research finds that changing the structure of cash transfer programs can have a significantly different effect on enrollment and attendance rates, as well as graduation, enrollment in secondary school and matriculation to tertiary institutions. The first experiment compares the ‘basic’ with the ‘savings’ treatment, while the second experiment evaluates the ‘tertiary treatment’.
 
On average, all of the designs significantly increase attendance, generating gains of 3 to 5 percentage points. Despite the reduced bi-monthly transfers, the savings and tertiary treatments increase attendance rates by at least as much as the basic treatment. However, these two non-standard treatments are superior to a basic cash transfer when considering enrollment rates at both the secondary and tertiary levels. Within secondary school, simply postponing part of the transfer increases re-enrollment by 4 percentage points compared with no significant change for students in the basic treatment. The tertiary treatment increases secondary enrollment by 3.7 percentage points. The savings and tertiary treatments also appear to succeed in increasing the matriculation to tertiary institutions. The savings treatment increases enrollment by 9.4 percentage points while the tertiary treatment proves particularly effective, increasing matriculation by 48.9 percentage points.
 
Moreover, this study identifies the specific groups for which the different interventions have greatest effects. The difference, for example, in performance of the basic and savings treatments is entirely driven by their effects on the most at-risk students. The savings treatment is especially effective at improving enrollment of the lowest income students and students with the lowest participation rates. In comparison, the basic treatment has little effect on these groups of students. The tertiary treatment performs similarly to the savings treatment with a much more significant impact on students unlikely to re-enroll. This suggests that modifications in the structure of these interventions can also help target the program by better meeting the needs of those students most likely to drop out of school.  
There is some evidence that participation in these programs may cause potentially worrisome reallocation of resources within the household. For example, such spillover effects are evident in the finding that siblings (particularly sisters) of treated students work more and attend school less than those in families that received no treatment. Such findings suggest that families may decide to concentrate resources towards the sons and daughters that have become program beneficiaries, and away from those children that did not.
 
Overall, this research shows that experimenting with the design of incentive programs may have substantial benefits in terms of the efficacy of these programs. Simply postponing some of the cash transfers to a large lump-sum paid at the time of re-enrollment increases enrollment in both secondary and tertiary institutions without reducing daily attendance – particularly so for the poorest students and those most at-risk of dropping out. Moreover, incentivizing on graduation rather than on attendance alone has proven to be particularly effective, leading to higher levels of daily attendance and higher levels of enrollment at secondary and tertiary levels.
 
Related Papers Citations: 
Barrera-Osorio, Felipe, Marianne Bertrand, Leigh Linden, and Francisco Perez-Calle. 2011. "Improving the Design of Conditional Transfer Programs: Evidence from a Randomized Education Experiment in Colombia." American Economic Journal: Applied Economics. 3(April): 167-95.

 

Marianne Bertrand

Environmental Investments on Private Land: Planting Trees in Chipata

Many climate change programs that target small-scale farmers seek to change farmers’ agricultural practices, whether to sequester additional carbon or to improve climate resiliency. Farmers are often hesitant to adopt new practices as they often entail high upfront costs. Climate change programs therefore generally provide inputs or incentives for adopting and complying with the program’s objectives. Yet it is unclear how much farmers respond to inputs and incentives, and to which they respond more favorably. This study in Zambia assesses the impact of two programs, one that provides incentives to farmers to grow a nitrogen-fixing tree, and another that provides inputs.

Policy Issue:

Financing for carbon offset investments is growing quickly. The voluntary market for carbon offsets traded over 700 million dollars worth of emissions reductions in 2008, a third of which came from land use projects.[1]  These investments have the potential to benefit smallholder farmers, not only by creating revenue from selling carbon credits, but also by incentivizing more climate-resilient agricultural practices and technologies to increase production. Many climate change programs that target smallholder farmers seek to modify current agricultural practices, whether to sequester additional carbon or to improve climate resiliency. Because these changes often impose costs on the farmer, many programs provide upfront inputs or incentives for adopting and complying with the program’s objectives.

However, in spite of a growing number of NGO- and government-led adaptation and climate resilience projects, farmer adoption remains a challenge and concerns persist due to the high cost of inputs, training and monitoring in comparison to the value of the credits earned from sequestered carbon. A more rigorous understanding of the relationship between input costs, compliance incentives and program outcomes may help improve the success and cost effectiveness of both carbon offsets and climate resiliency programs. To date, none of the numerous programs that offer landholders inputs or performance payments have systematically varied contract design to generate causal evidence on the determinants of program success.   This study proposes address this knowledge gap in the context of a program promoting fertilizer trees in Eastern Zambia.

The project implementation is designed to allow the researchers to investigate (a) the role of option value in shaping farmer decisions, and (b) the effect of cost sharing and performance incentives on selection into the project and on long-run performance under the contract.

Details of the Intervention:

The partner organization, Mitengo Zambia promotes a fertilizer tree (Faidherbia albida), locally known as the masangu tree, both for its carbon sequestration potential and its ability to help farmers adapt to a changing climate.  Faidherbia fixes nitrogen in its leaves, providing benefits to farmers, including better soil fertility, maize yields and resilience to climate change. To grow the tree, seedlings must be purchased and raised, and then planted among low growing crops, weeded and watered. These adoption costs are highest in the first year and tree survival is low.

Mitengo Zambia  has partnered with Dunavant Cotton to investigate the carbon sequestration and soil fertility potential of encouraging agroforestry adoption among Dunavant farmers. Findings from the research phase will be incorporated in program scale-up with Dunavant Zambia Limited, a leading cotton ginning company in Zambia.

Description of the Intervention:

Around 2,000 outgrower farmers associated with Dunavant cotton in Chipata, Eastern Province, Zambia receive training and subsidized inputs (seedlings) for growing Faidherbia on their land. Most Dunavant farmers produce on a small-scale, with a mean landholding size in the study sample of around one hectare, and have access to loans for cotton inputs from Dunavant.  The company organizes the farmers into groups of approximately 15 geographically clustered farmers. Each group has one lead farmer who, under the Dunavant system, is responsible for training his farmer group on cotton production and, under the Mitengo Zambia program, on Faidherbia planting and management.  

Lead farmers organize trainings on Faidherbia for their groups of farmers, which are attended by Mitengo Zambia and IPA staff who assist with administration of the treatments and the baseline survey.

After their training, farmers decide whether to join the program based on two factors:

(1) Variation in input prices – Farmer groups will be randomly assigned to receive one of four input prices that range from fully subsidized (free) to the cost-recovery price for the implementing organization (approximately $2.50 US). A transport allowance (of $2.50), provided to the farmers to remunerate any transportation costs of attending the lead farmer's training, ensures that farmers have enough cash to make a participation decision based on willingness to pay, not on liquidity constraints. Variation in input prices allows researchers to test hypotheses on risk and on cost-sharing. Specifically, how the probability of take-up changes as the input prices increase, controlling for individual characteristics and incentives, will be assessed.

(2) Variation in incentives – Individuals will be randomly assigned to receive different levels of incentive pay, which farmers are informed of either before or after making their take-up decision. The range of incentives is based on project pilots from the previous year, which ranged from $0 - $30 (0 - 150,000 ZMK). The use of scratch-off cards to reveal the incentives ensures that incentives cannot be manipulated and that the variation is perceived as fair by the participants.  Incentives will be paid after one year, conditional on 70% tree survival.  All farmers received 50 seedlings. The variation in incentives will allow researchers to test the causal effect of incentives, by comparing the probability of take-up and the rate of tree survival for farmers at different incentive levels, controlling for individual characteristics.

At the time of training, farmers receive a detailed baseline household questionnaire that includes modules on demographics, socioeconomic status, agriculture and environmental knowledge. The survey is administered to all farmers who attend the training, regardless of their decision to participate. One year after contracts are initiated, all participating farmers will be visited and the number of surviving trees recorded, an incentive payments delivered on the basis of tree survival.

Results and Policy Lessons:

Results forthcoming.

Read detailed findings from an in-country event with cross-sector stakeholders from the Zambian government, private sector, international donor and research community, and leading non-governmental organizations here.


[1]Conte, M. and M. Kotchen. Explaining the price of voluntary carbon offsets. Working Paper. (2009)

 

Conditional Cash Transfers and HIV/AIDS Prevention in Malawi

Conditional cash transfers, where money is given to individuals on certain conditions, have been used successfully to incentivize families to send their children to school, to encourage people to get preventive healthcare check-ups, and to change other behaviors. In this study, researchers evaluated if financial incentives could motivate safer sexual behavior. In Malawi, where 11 percent of adults are infected with HIV/AIDS, participants were offered different sums of money to maintain their negative HIV status for one year. The promise of financial incentives of any amount—even four months of wages—had no effect on subsequent sexual behavior, pregnancy or HIV status. However, after receiving the monetary reward, men were significantly more likely to have engaged in unprotected sex. Women were significantly less likely to have had unprotected sex after receiving the money. The results suggest that policymakers should use caution in considering conditional cash transfers as a tool for HIV prevention.

Policy Issue: 
At the end of 2009, more than 33 million people were living with HIV. Given the extent of the HIV/AIDS epidemic, policymakers face an urgent need to develop effective treatment and prevention programs. While most HIV prevention strategies target behavior change, evidence of the impact of these programs remains controversial and no single intervention has emerged as an established approach. Conditional cash transfers (CCTs) have been used successfully in a variety of settings as a means of incentivizing socially desirable behavior change, such as school enrollment or attendance at preventive healthcare check-ups. There is some evidence that CCTs could be used to prevent the spread of HIV by incentivizing individuals to stay free of sexually transmitted diseases, however more evidence is needed to understand responses across various contexts and populations.

Context of the Evaluation: 
Eleven percent of adults in Malawi are infected with HIV/AIDS, giving the country the 9th highest prevalence in the world.1 Although the HIV prevalence rate in the sample area was considerably lower than the national rate, at 6.3 percent, it was comparable to, or greater than, the prevalence rate in much of sub-Saharan Africa. For comparison, in 2009, the HIV prevalence rate in Kenya and Sierra Leone was 6.3 percent and 1.6 percent, respectively.

Existing research suggests that CCTs may be an effective method to reduce sexual behavior and prevent HIV. In Tanzania, a program that offered cash incentives for remaining free of curable sexual transmitted infection (STIs) led to a significant reduction in STI infections when participants were offered a large transfer (US$20). However, the program had little impact when participants were offered a moderate transfer (US$10). A second study in Malawi offered girls and their parents US$15 each month to attend school, in addition to covering all school fees. After one year, girls offered the unconditional incentives were significantly less likely to be infected with HIV.ii

Details of the Intervention: 
Researchers sought to evaluate whether offering individuals financial incentives to maintain their HIV status could be an effective HIV prevention strategy in rural Malawi. Researchers measured the impact of conditional cash transfers (CCTs) on reported sexual activity, condom use, and incidences of HIV infection. The CCT program builds upon a previous evaluation of the Malawi Diffusion and Ideational Change Project (MDICP), where respondents were offered free door-to-door HIV testing and randomly assigned cash incentives to obtain their results from nearby testing centers.

Among MDICP participants that agreed to be tested for HIV in 2006, 1,307 were randomly invited to participate in the CCT program. Seventy-six percent of the sample enrolled as individuals, while the remaining enrolled as couples. Participants were offered incentives of random amounts ranging from zero to 2,000 MWK (approximately US$16) for individuals, and from zero to 4,000 MWK (approximately US$32) for couples, all of which were conditional on maintaining their HIV status for approximately one year. The incentives represented a significant amount of money for respondents, with the higher amount equal to approximately three to four months wages. 

Throughout the year, program staff visited participants in their homes and asked about their sexual behavior in the last nine days through interview-administered sexual diaries. From these diaries, researchers developed several indicators of risky or safe sexual behavior, including pregnancy, incidents of vaginal sex, number of days having vaginal sex, condom usage, and the presence of condoms at home. Data was collected three times over the period of the study, at roughly three-month intervals. After the last round of surveys, a trained nurse visited each participant to test for HIV, and financial incentives were awarded based on whether they had maintained their HIV status. Approximately one week later, each respondent was surveyed again about his/her sexual behavior in the past week.

Individuals who were HIV-positive at the start of the program automatically received the monetary incentive at the end of the study. These individuals were included in the sample to avoid the possibility that being excluded from the study would signal their HIV positive status to outsiders.

Results and Policy Lessons: 
The promise of financial incentives of any amount had no effect on subsequent self-reported sexual behavior or HIV status. Self-reports may be biased towards individuals over-reporting safe sexual behavior, particularly for individuals receiving higher incentives. Despite these potential biases, which would lead to an overestimation of program impact, financial incentives appear to have had no effect.

Although the conditional offer of money had no impact, receiving cash after the final round of HIV testing was found to have large effects on respondents' self-reported behavior. In the week following the receipt of the cash transfer, men who received the money were 12.3 percentage points more likely to have had vaginal sex and had approximately 0.5 more days of sex. While self-reported condom use among these men increased by 6.9 percentage points, overall, they were 9 percentage points more likely to engage in riskier sex. Women, on the other hand, were 6.7 percentage points less likely to report engagement in risky sex, a result that is driven by abstinence rather than increased condom use.

These results provide evidence that money given in the present may have much stronger effects than rewards in the future. Unlike the CCT program in Tanzania, this study found no effect of financial incentives on risky sexual behavior, suggesting that policymakers should use caution in considering CCTs as a tool for HIV prevention. The fact that a cash grant reduced risky sexual behavior for women provides further evidence that money can be protective for women, but cautions that programs that aim to motivate safe sexual behavior in Africa may be sensitive to the local and/or cultural context, and the degree of agency individuals to determine their own sexual behaviors.

 

i UNAIDS (2010) “UNAIDS Report on the Global AIDS Epidemic.” www.unaids.org/globalreport/Global_report.htm

ii Baird, Sarah, Craig McIntosh, and Berk Ozler. 2011. "Cash or Condition? Evidence from a Cash Transfer Experiment." The Quarterly Journal of Economics 126(4): 1709-1753.

 

Related Papers Citations: 

Kohler, Hans-Peter, and Rebecca Thornton. 2011. "Conditional Cash Transfers and HIV/AIDS Prevention: Unconditionally Promising?" World Bank Economic Review 26(2011): 165-190.

 

 

 

Rebecca Thornton

Financial Inclusion for the Rural Poor Using Agent Networks

Many people in developing countries rely on risky and expensive methods of managing their assets. In this study, researchers are evaluating whether lowering the cost of accessing savings accounts through local point-of-sale enabled agents and providing financial literacy training impacts the saving and consumption patterns of cash transfer beneficiaries in rural Peru.

Policy Issues:
In developing countries, poor households often do not have access to formal financial products or utilize bank accounts to save for the future. Without a safe and secure way to save, many people rely on riskier and more expensive methods of managing their assets. Increasingly, government-to-person cash transfer programs are addressing this issue by providing beneficiaries with formal savings accounts through which they disburse the cash transfers. In Peru, evidence from one such program suggests that very few beneficiaries use their accounts to save, preferring instead to withdraw the entire cash transfer immediately after it is made. Beneficiaries may prefer to withdraw their funds all at once due to the time and cost required to travel to a bank branch or ATM to access their account, especially in rural areas where there is limited banking infrastructure.
 
Would reducing the cost of accessing formal bank accounts lead beneficiaries to use their accounts to save more of their cash transfers or change their spending patterns? This evaluation explores how the introduction of branchless banking affects the costs of accessing cash transfers and how beneficiaries respond to reduced transaction costs. 
 
Context:
The Peruvian Ministry of Development and Social Inclusion operates a conditional cash transfer program called JUNTOS. The program provides a bi-monthly transfer of 200 Peruvian soles, approximately US$70, to 660,000 impoverished female heads of households who are either pregnant or have children under 19 years of age. The transfers are conditional on households providing access to education, nutrition, and health services for their children. The state bank, Banco de la Nación, opens a savings account for all JUNTOS beneficiaries. While 67 percent of users collect payments through these accounts (as opposed to delivery via armored transport), only 18 percent of users have a bank branch in their district. As a result, most users must collect their payments from a branch in a neighboring district.
 
Preliminary analysis of government data suggests that users  commute on average over five hours and spend 10 percent of their payment on transportation to receive their transfer. Facing such steep costs, most users limit the number of trips they make to a bank branch and withdraw their payments all at once when they do make the trip. Transportation costs are often raised on payment days and markets with an abundance of temptation goods are typically organized around bank branches, leading to a large amount of the transfer to be spent on the day of payment. This pattern of infrequent and relatively large withdrawals may make it difficult for many beneficiaries to use their JUNTOS accounts to save, even if they wish to do so. In an initial survey, 31 percent of JUNTOS beneficiaries report having some type of monetary savings, but only one percent of beneficiaries do so through their JUNTOS account. 
 
Description of Intervention:
Researchers are conducting a randomized evaluation to explore the impact of allowing JUNTOS beneficiaries to collect their payments though branchless banking agents. In the branchless banking system, local bank agents, typically shopkeepers, serve as deposit and withdrawal points for account holders to access their funds with debit cards. The agent based network will allow the national bank to increase the number of withdrawal points for JUNTOS users, reducing transportation costs and potentially giving users a greater degree of access to their accounts. If this is the case, users may begin to use their account to save more of their JUNTOS payments, making smaller and more frequent withdrawals. 
 
In order to evaluate the effect of branchless banking, a sample of 60 sub-regional districts, each with approximately 300 JUNTOS beneficiaries, will be randomly assigned to one of three groups. In the first group, branchless banking agents will be established in each district, allowing beneficiaries to access and withdraw funds from their JUNTOS accounts. In the second group, branchless banking agents will be introduced and users will also receive basic financial literacy education and training on accessing their accounts through branchless banking agents. The third group will serve as a comparison group, where branchless banking agents will be introduced only after the twelve-month evaluation period. One year after banking agents are introduced, the researchers will collect information on savings and consumption behavior from household surveys. The study will also incorporate administrative account usage data from Banco de la Nación and the JUNTOS program to examine how beneficiaries use their accounts when they can access them through branchless banking agents.
 
Results:
Results forthcoming.

Estimating the Impacts of Microfranchising on Young Women in Nairobi

Youth unemployment is a major challenge in many low-income countries, and evidence suggests young women in urban areas are disproportionately affected. This study in Kenya evaluates the Girls Empowered by Microfranchising program, which connects unemployed participants with local business franchisors and provides mentoring and startup capital for participants to launch businesses. The study will measure the direct impacts of the microfranchising intervention on participants; compare program impacts to the effect of a cash grant program; and estimate the impact of new microfranchises on nearby businesses.

Policy Issue:

Youth unemployment is a major challenge in many low-income countries, and evidence suggests young women in urban areas are disproportionately affected. While many programs have attempted to increase young women’s physical and human capital, evaluations of these programs have generated mixed results. However, there is mounting evidence that multifaceted economic empowerment programs that combine job skills or vocational training with more holistic life skills education can have substantial impacts on the entrepreneurial activities of young women. Microfranchising is a recent policy innovation that falls in this category. Microfranchising programs connect unemployed participants with local franchisor businesses, providing motivated individuals with an established business model and the capital and business linkages needed to make their business model operational. In developing country settings where formal sector employment is relatively unavailable to young women, microfranchising programs may be especially valuable. This study is the first ever impact evaluation of a microfranchising program.

Context of the Evaluation:

This study targets young women aged 16 to 19 residing in slum areas of Nairobi. In Kenya, 55 percent of urban women aged 15 to 25 in the labor force are unemployed, as compared with 34 percent of young men in urban areas, 28 percent of young women in rural areas, and 18 percent of young men in rural areas.1

The International Rescue Committee (IRC), the implementing partner in this study, which had implemented a microfranchising program in Sierra Leone, partnered with researchers and IPA to evaluate the impact of the Girls Empowered by Microfranchising (GEM) program in Kenya.

Description of the Intervention:

Researchers are conducting a randomized evaluation in Nairobi to measure the direct impact of the GEM program on a range of participant outcomes, compare program impacts to the effect of cash grants comparable in value to the microfranchising package, and estimate the effects of the GEM microfranchises on existing businesses.

After IPA conducted an initial survey in 2013, 1,341 willing participants were randomly assigned to either the GEM program, a cash grant program, or a comparison group.

Women assigned to receive the GEM program, implemented by the IRC in coordination with two community-based organizations, were invited to attend an orientation, followed by a 10-day business and life skills training course, and a several-day-long franchise-specific training. Those who completed the trainings received start-up capital in the form of equipment and supplies worth approximately US$200 to start up a new business. The micro-franchisees then launched their businesses with one of two relatively well-known firms in Kenya, a prepared foods franchisor and a hair salon franchisor. Mentors from the community-based organizations regularly visited participants, providing ongoing support over the first months after launching the business.

Women assigned to the cash grant program, implemented by IPA, were invited to initial information sessions where they learned about the unconditional cash grants of 20,000 Kenyan shillings (approximately US$200).  Grants were distributed at subsequent meetings and participants were given the option of receiving the grants in cash or through mobile money transfers.

In addition to comparing the impact the GEM program to the provision of comparably sized cash grants, researchers are measuring the direct impacts of the microfranchising intervention on participants approximately one year after launching a microfranchise; the indirect impacts of the GEM program on women whose friends participated in the program; the number of microfranchises that succeed or fail within the first year and factors associated with success; and the impacts of the newly launched microfranchises on pre-existing businesses in the target neighborhoods.

Results and Policy Lessons:

Results forthcoming

 


[1] UNDP. Discussion Paper: Kenya's Youth Employment Challenge, January 2013. 

Ultra Poor Graduation Pilot in Yemen

Can an intensive package of support lift the ultra poor out of extreme poverty to a more stable state? Graduation programs provide ultra-poor beneficiaries with a holistic set of services including: consumption support, new livelihoods (such as chickens or goats) provided as an asset transfer along with training on management of the assets, access to savings, and coaching visits over a 24-month period. IPA is conducting randomized evaluations of CGAP and Ford Foundation-sponsored graduation pilots in seven countries: IndiaPakistanHondurasPeruEthiopiaYemen, and Ghana.

Policy Issue:

Governments have often attempted to address the needs of the ultra poor by offering consumption support that is costly and offers no clear pathway out of food insecurity. The Graduation Approach, developed by BRAC in Bangladesh, recognizes that the ultra poor face an interrelated set of challenges: lack of skills, assets, and confidence, along with nutritional gaps and health shocks. The graduation approach incorporates a comprehensive package of services designed to ensure that households have the "breathing space" to focus on building new livelihoods, along with a secure place to grow their assets.

This project is a part of a set of evaluations, in partnership with CGAP and the Ford Foundation, that intends to determine whether the model, pioneered in Bangladesh, is effective in a range of contexts.

Context of the Evaluation:

Located on the tip of the Arabian Peninsula, Yemen faces economic challenges. Food insecurity, aggravated by a scare supply of water, leaves 32 percent of the country undernourished [1].  Over 45 percent of the population lives under $2 US a day and about 17 percent lives under $ 1.25 US a day [2]. The Social Welfare Fund (SWF), the Yemeni welfare department, and the Social Fund for Development (SFD), a government-run development agency, have partnered with IPA to pilot the Graduation Model in three governorates of southern Yemen.

Description of the Intervention:

The Graduation Model in Yemen works in accord with the SWF welfare system.  All households in the sample frame come from the SWF welfare lists and receive an average quarterly stipend of 3,000 YR ($15 US).  The poorest households are identified using the Progress Out of Poverty Index and are verified as the poorest during SWF field officer visits.  These households are then randomly assigned to either a treatment or comparison group. Beneficiaries in treatment households receive training on an income generating activity such as, sewing, raising livestock, or petty trading.  As households’ income and food consumption stabilizes, beneficiaries are required to open a savings account at the local post office and are encouraged to reach a savings goal of 10,750 YR (about $ 50US) by the end of the two year program. In addition, these ultra poor households are monitored throughout the program with weekly visits from field officers and receive additional trainings on confidence building, social integration, and sanitation practices.

Results and  Policy Lessons:

Results forthcoming.

For additional information on the Ultra Poor Graduation Pilots, click here.

 

[1]World Bank, “Yemen Country Brief

[2] The World Bank, “Yemen

Moving Beyond Conditional Cash Transfers in the Dominican Republic

Conditional cash transfers have proven effective as incentives for the extreme poor to visit a health clinic or send their children to school. But are such programs sustainable? If the cash assistance is taken away, will families find themselves back where they started before the program? In this study, researchers evaluate if financial education and business training can help recipients graduate from a conditional cash transfer program, and what type of training is most beneficial.

Policy Issue:
Cash transfer programs are increasingly common across developing countries. These programs provide income support to those living in extreme poverty, and in the case of conditional cash transfer (CCT) programs, provide incentives for parents to invest in the human capital of their children by making the transfers conditional on certain behaviors, like attending school or visiting a health clinic. Despite their established benefits in terms of improving health and educational achievement, many policymakers and development practitioners remain concerned about the extent to which households may become dependent on cash transfers to maintain their living standards. Even with greater access to healthcare and education, it can be difficult for beneficiary households to manage their personal finances, find and maintain a stable job, or start a new business. It is not clear whether families will revert to pre-program poverty levels when the transfers are no longer provided, or whether the transfers enable more permanent changes in household and business finances, ultimately allowing beneficiaries to graduate from the program.
 
Context of the Evaluation:
Solidaridad is a CCT program in the Dominican Republic that provides cash transfers to poor households if they invest more in education, health, and nutrition. Eligible families receive around US$75 every three months if they comply with certain conditions, including the school enrollment and attendance of all household children, and regular health check-ups for children under the age of five years old. Approximately 20 percent of the Dominican population lives in moderate or extreme poverty, and are eligible to receive trimonthly transfers from the program.[1] The beneficiaries receive these transfers via a debit card to be used to purchase basic food products at authorized stores, and meet every three months in community groups (núcleos) to receive training in nutrition and preventive health. However, Solidaridad does not currently have a graduation strategy to encourage beneficiaries to improve their household financial management and develop stable income sources from jobs or small business creation.
 
Description of the Intervention:
Researchers are using a randomized evaluation to assess whether providing financial literacy and business training to CCT beneficiaries can help them graduate from the program, and what type of training is most beneficial.
Two hundred and forty núcleos, with a total of 3,600 individuals, will be selected from government administrative data and randomly assigned to either the treatment or comparison group. All members of the treatment group will receive financial literacy training intended to improve household financial management skills. In addition, núcleos in the treatment group will also be randomly selected to receive one or more of the following:
  • Professional vs. peer trainers. Of the 120 núcleos in the treatment group, half will receive financial literacy training from professional trainers, while the other half will receive the training from their peers.
  • Business vs. job skills training.In addition to the financial literacy training, half of the núcleos in this treatment group will receive an additional training session on financial management for businesses, while the other half will receive additional training on job skills (finding, acquiring, and maintaining employment).
  • Budgeting notebooks. Within each núcleo, a random subset of beneficiaries will be selected to receive notebooks that can be used to maintain household and/or business budgets to test whether the notebooks increases the impact of the training.
  • Access to formal financial services. Of the beneficiaries who already own a business and are interested in and eligible to receive a loan, a random subset will be offered a loan and an accompanying savings account from a local commercial bank.
Key outcome measures include knowledge and management of household and business finances, household and business assets, and the employment status and conditions of household members.
 
Results and Policy Lessons:
 
Results forthcoming

[1]Government of the Dominican Republic. “Programa Solidaridad.” http://www.solidaridad.gov.do/

Unconditional Cash Grants for People with HIV/AIDS in Uganda

Research has shown that HIV/AIDS impacts not only the health of infected individuals, but also their financial security, and the financial security of their households, often aggravating existing poverty. Researchers will introduce unconditional cash grants, coupled with financial planning sessions, to people living with HIV/AIDS to evaluate the impact on the health and financial security outcomes of participants.

Policy Issue:

Evidence indicates that HIV/AIDS affects not only infected individuals, but also the health and wealth of their households. When a household member is affected by HIV/AIDS, it can exacerbate existing poverty by hindering productivity and imposing additional costs on households, such as health care and funeral costs. The link between HIV/AIDS and poverty has caused some researchers and policymakers in recent years to examine financial assistance as a potential tool in the fight against AIDS.1 This study sheds light on this relationship by evaluating the impact of providing unconditional cash grants, coupled with financial planning sessions, to people living with HIV/AIDS.

Context of the Evaluation:

In Uganda, approximately 1.5 million people, or 7.2 percent of the population, are living with HIV.2 The high infection rate is coupled with high rates of poverty, especially in rural areas. In 2012, Uganda ranked 161st among 187 countries on the United Nations Development Program’s Human Development Index.

The AIDS Support Organization(TASO), the implementing partner in this study, is a Ugandan NGO founded in 1987. TASO has provided HIV/AIDS services to over 200,000 individuals since its inception, and now has eleven service centers spread across Uganda.TASO is looking for new evidence-based ways of supporting their clients, and is prepared to expand microfinance and grant opportunities across Uganda if there is compelling evidence that these programs improve patients’ lives.

Details of the Intervention:

To evaluate the impact of unconditional cash grants on the health and financial security outcomes of people living with HIV/AIDS, researchers will carry out a randomized evaluation of a cash grant program, jointly designed by researchers and TASO, and administered by TASO. The unconditional cash grant program will provide cash transfers of 350,000 Ugandan shillings (approximately US$138), with no strings attached, to HIV/AIDS positive TASO clients.

Approximately 2,200 HIV/AIDS positive TASO clients, ages 18-60 will be randomly divided into one of four groups: i) a treatment group that will receive cash transfers with no accompanying instructions on how the money should be spent, ii) a treatment group that will receive cash transfers plus financial counseling, iii) a treatment group that will be told they will receive cash transfer after one year, and iv) a comparison group that will not receive any intervention. The third treatment group will enable researchers to see how participants’ financial status and planning changes, or if it changes at all, when they know they will receive money in one year.

The quarter of clients that receive both cash grants and financial counseling will meet with a financial counselor twice at a TASO center, with six days between the meetings, and then will receive the grant at the end of the second one-hour meeting. At the meetings, the counselors will help clients think through and plan for the grant. Discussions will focus on topics such as setting realistic expectations, prioritizing expenses, handling family members’ expectations of the grant, and resisting temptations. Furthermore, the counselors will go into detail about income generating activities, loans and/or saving, depending on the client’s particular interests.

 
Results and Policy Lessons:

Results forthcoming.

 


[1] Sengupta, Rajdeep, and Craig P. Aubuchon. "The microfinance revolution: An overview." Federal Reserve Bank of St. Louis Review 90, no. January/February 2008 (2008).

[2] UNAIDS. Country Report Uganda. 2012. Available at: http://www.unaids.org/en/regionscountries/countries/uganda/

Testing the Effectiveness of Payments for Ecosystem Services to Enhance Conservation in Uganda

Policy Issue:

Deforestation contributes as much as 25 percent  of global greenhouse-gas emissions each year. Curbing deforestation in developing countries is potentially a very cost-effective way to reduce carbon emissions and address climate change. Recently, the United Nations launched a major initiative to pay developing countries for reduced deforestation. The program, known as REDD+ (Reducing Emissions from Deforestation and Degradation), may be incorporated into global carbon markets under the next international climate treaty, resulting in billions of dollars in payments from wealthier countries for forest conservation. However, despite growing interest and investment in reducing deforestation, surprisingly little research has been conducted on the most cost-effective ways to do so. One popular policy approach is payments for ecosystem services (PES), where participants receive payments if they comply with a set of conditions that are protective of the environment, such as refraining from cutting down trees on their land. PES programs are increasingly popular because of their perceived simplicity in comparison to alternative conservation interventions. It is important to evaluate this and other types of emission reduction interventions in order to determine the most cost-effective way of reducing carbon emissions.

Context of the Intervention:

Forest loss in Uganda is estimated to be about 2 percent per year, with an even higher rate on private land.[i] The project is based in the districts of Hoima and Kibaale, which are located in the equatorial zone of western Uganda, and have some of the highest deforestation rates in the country. These districts are predominantly rural, with a population density of about 97 persons/km2 and a combined population of around 750,000 inhabitants.  

While the environmental effects of deforestation are not limited to a particular portion of the population, the PES project is specifically targeted at private landowners who have forests on their land since they are the population with ownership rights over local forests and can decide whether or not to clear trees from their land. Forest owners might cut trees to clear land for growing cash crops such as tobacco and rice or to sell the trees as timber or for charcoal production. Cutting down trees provides the landowners with income, but is a threat to carbon storage as well as the survival of local wildlife (particularly the endangered chimpanzee population).

Description of the Evaluation:

One hundred forty villages in the Hoima and Kibaale districts of Uganda were randomly assigned to either the treatment or the comparison group. In the treatment villages, Chimpanzee Sanctuary and Wildlife Conservation Trust (CSWCT) staff members offered an incentive contract to each individual landowner, under which they will receive annual payments if they meet certain terms. Landowners are required to refrain from cutting trees on their land (with some exceptions built into the contract) and also to re-forest a portion of the land.  CSWCT employees monitor compliance with the contract by conducting random spot checks in the forest to look for things like newly cleared patched or fresh tree stumps.

The study will measure social and economic welfare as well as environmental outcomes, and will be linked with satellite imagery that assesses spatial patterns of forests.

Results and Policy Lessons:

Results forthcoming.

Read more about this research in blog posts by researcher Seema Jayachandran, here and here


[i] National Environment Management Authority (NEMA) Uganda. “National State of Environment Report for Uganda 2007/2008”

The Impact of Smartcard Electronic Transfers on Public Distribution

Advances in payments technology have the potential to improve the efficiency of slow and corrupt public welfare programs. Researchers tested how Smartcards, which coupled electronic transfers with biometric authentication, affected the functioning of two government welfare schemes in India. They found that even though the new Smartcard system was not fully implemented, it resulted in a faster and less corrupt payments process without adversely affecting program access. Investing in Smartcards was cost-effective, and beneficiaries overwhelmingly approved the new payment system.
 
Policy Issue 
 
State-sponsored welfare programs are often constrained by corruption and inefficiency. The problem is of particular concern in India, where by some measures, only 15 percent of spending on social programs actually reaches the intended beneficiaries. Such corruption strains state finances and reduces the potential impact of government programs. Transferring benefits through payment systems that use biometric authentication to verify recipients’ identities may help address these challenges. Secure electronic transfers may reduce financial leakages, transaction costs, and time spent accessing payments. However, reducing one form of corruption may simply displace it into other areas, and switching to electronic payments may also limit participation if beneficiaries do not register for biometric cards, if they lose their cards, or if technical challenges prevent them from receiving payments.  
 
Evaluation Context
 
In India, there is widespread interest in using new payments technologies to improve the performance of public welfare programs and increase financial inclusion. In 2009, the national government launched an ambitious initiative, called Aadhaar, to give all 1.2 billion residents unique, biometric IDs, and then make payments to beneficiaries of social programs via bank accounts linked to these IDs.
 
Some state governments have developed their own electronic transfer systems alongside the national identification project. In 2006 , the Government of Andhra Pradesh, in southeast India, started an initiative to shift towards using "Smartcards" to transfer government benefits to the poor. While the government intends to eventually use Smartcards for a wide range of programs, it piloted their use with two large social welfare schemes: the Mahatma Gandhi National Rural Employment Scheme (NREGS)—which guarantees rural households 100 days of paid employment per year—and Social Security Pensions (SSP)—which makes monthly payments to elderly, widowed, and disabled individuals. In 2010, facing several logistical challenges, the government decided to restart the program in eight districts where the Smartcards had yet to be rolled out. These eight districts, which are spread throughout the state, have a combined rural population of about 19 million people. 
 
Description of the Intervention 
 
Researchers used a randomized evaluation to assess the impact of Smartcards on leakages in NREGS and SSP, and the welfare of program beneficiaries. Researchers partnered with the Government of Andhra Pradesh to randomize the roll out of the program in the eight districts that had not yet received Smartcards in three waves over two years. The Smartcard program was introduced in 113 mandals (sub-districts) in the first wave, 195 mandals in the second wave, and the remaining 45 mandals in the third wave. The analysis compared the first wave to receive the program with the third wave of mandals, where Smartcards were not introduced until after the final survey.
 
The program introduced two major changes to the existing payment system: it required beneficiaries to biometrically authenticate their identity before collecting payments, and it delivered payments through a Customer Service Provider (CSP) in each village, rather than at a more distant post office. When beneficiaries enrolled in the Smartcard program, their fingerprints and a photograph were taken, and they were issued a bank account and a Smartcard, which contained a chip storing the biometric and bank account information.
 
In order to collect a payment, beneficiaries visited the local CSP, who was usually a secondary school-educated woman from a traditionally disadvantaged caste who resided in the village. The CSP kept a small device which could read the beneficiary’s fingerprint and match it with the details stored in the Smartcard. If the match was successful, the CSP disbursed cash and the authentication device printed a receipt.
 
Results
 
Researchers found that the Smartcard program reduced the time it took beneficiaries to receive payments, reduced leakages, and increased beneficiary satisfaction, even though it was not fully implemented. 
 
Take-up: After two years, about 81 percent of villages in the first wave of the program rollout had installed the Smartcard-based payment system for NREGS and 86 percent had adopted it for SSP. In villages where the new payments system was available, about 65 percent of payments were made to beneficiaries with Smartcards, meaning that just over 50 percent of all payments in treatment areas were made using the new system.
 
Payment time: In areas assigned to adopt the Smartcard payment system, the amount of time NREGS beneficiaries spent collecting payment fell by 21 minutes (a 19 percent reduction from 112 minutes). The system also reduced the lag between working on an NREGS project and collecting payment by about seven days (a 21 percent reduction from 34 days). There was no significant effect on the amount of time SSP beneficiaries waited to collect their payments, but unlike NREGS payments, these payments were delivered at the village-level prior to the adoption of Smartcards. 
 
Leakages: NREGS recipients in areas assigned to receive the Smartcard system reported weekly earnings that were Rs. 35 higher (a 24 percent increase from Rs. 146). However, there were no major impacts on the amount the government spent on the NREGS program, suggesting a reduction in leakages. There was no significant impact on earnings for SSP beneficiaries, as these benefits were fixed, but there was a 1.8 percentage point reduction in the incidence of bribes demanded for disbursing payment (a 47 percent reduction from 3.8 percent). 
 
Beneficiary satisfaction: In surveys, 84 percent of NREGS beneficiaries and 91 percent of SSP beneficiaries preferred Smartcards to the status quo. However, many recipients feared losing their Smartcards (53 percent of NREGS beneficiaries and 62 percent of SSP beneficiaries) or reported having problems with the authentication device (49 percent of NREGS beneficiaries and 59 percent of SSP beneficiaries).
 
Cost effectiveness: Researchers estimated the value of the time beneficiaries spent collecting payments and found that the value of time savings to beneficiaries (US$4.44 million) was approximately the same as the cost of the new system (US$4.25 million) for NREGS. Although the cost savings were less substantial for SSP (US$320,000, with system costs of US$1.85 million), these calculations suggest that the times savings to beneficiaries alone can sometimes justify the costs of implementing improved payments technologies. On top of these pure efficiency gains, there was an estimated $38.7 million reduction in annual leakage.
 

Temporary Labor Migration as Mitigation: Strategies for Managing Seasonal Famine

Rural to urban migration is a common feature of many developing economies, as people travel to larger cities in search of better employment opportunities. In places where farmers must rely on seasonal crops for their livelihood, seasonal migration away from rural areas can help households increase their income and mitigate the risk inherent in an otherwise agriculture-dependent economy.

 
Policy Issue: 
Rural to urban migration is a common feature of many developing economies, as people travel to larger cities in search of better employment opportunities. In places where farmers must rely on seasonal crops for their livelihood, seasonal migration away from rural areas can help households increase their income and mitigate the risk inherent in an otherwise agriculture-dependent economy. That some people choose to stay behind and risk famine indicates that there may be barriers to migration, such as credit constraints, lack of information about urban job opportunities, or a desire to remain with local family. Providing incentives for seasonal migration may help identify and overcome these barriers, and mitigate the negative effects that weather patterns can have on rural farmers. Additionally, incentivizing migration to urban labor markets may be a more cost-effective method of overcoming famine than simply providing food aid to the affected areas.
 
Context of the Evaluation: 
According to the 2005 Bangladesh Household Income and Expenditures Survey, 57 percent of households in the greater Rangpur districts in the Northwest were living below the poverty line compared to 40 percent in Bangladesh as a whole. In this region 43 percent of households experience extreme poverty, defined as individuals who cannot meet the 2100 calorie per day food intake even if they spend their entire incomes on food purchases only. These districts experience seasonal food insecurity, which can often result in famine, known locally as Monga. In Rangpur, Monga is connected to the cultivation of rice, which requires large labor input at planting and harvesting, but almost no work in between. Marginal farmers and agricultural laborers who do not have saved income and cannot find other work experience Monga.
 
It is common for agricultural laborers in other regions of Bangladesh to either switch to local non-farm labor markets or to migrate to urban informal labor markets in search of higher wages in response to price hikes and wage drops during the pre-harvest season. If he finds work, the laborer can send money back to his family to help alleviate the effects of the pre-harvest lean season. However, this is generally not seen in Rangpur District. A national survey found that 22 percent of all Bangladeshi households receive domestic remittances, while only 5 percent of households in Rangpur reported receiving domestic remittances. This intervention primarily seeks to understand why these Monga-affected workers appear hesitant to seasonally migrate to better employment opportunities.
 
Details of the Intervention: 
There were two principal interventions: providing information about job opportunities in other locations and providing monetary incentives to migrate.
 
A subset of households were given information about types of jobs available in other locations, the likelihood of getting each job, and approximate wages for four pre-selected potential migration destinations. A subset of households were offered Tk 800 ($11.50) to migrate either in the form of cash or credit. Tk 600 ($8.50) was given pre-migration and Tk 200 was given once the migrant reported to the research office at his or her destination. A random subset of those receiving a monetary incentive were required to migrate in groups of either 2 or 3 as a condition of receiving money, and a fraction of those groups were chosen by the researchers, while for the rest the households had some choice regarding whom to migrate with. Destinations were also specified for a random subset of the households receiving an incentive, while the rest could choose from a limited set of cities where the researchers had offices and enumerators stationed (to help track the migration experience) and still take advantage of the subsidy.
 
In total there were 21 treatment groups with different combinations of information, incentives, migration group size, and choice of migration partners or destinations.
 
Results: 
Incentives: The researchers found that offering an incentive to migrate had a large effect on likelihood of seasonal migration.  Over 40% of households that received a cash or credit incentive migrated, compared to only 14% of households not receiving an incentive.  Providing information about job opportunities but no incentives only increased the likelihood that someone from a household migrated by 3 percentage points. These results suggest that credit or saving constraints reduce migration.
 
Group Size: Requiring migrants to form groups of three instead of pairs reduced migration probability by almost 6 percentage points. Migrating in larger groups changes the dynamic for the individuals involved with respect to using social networks to find a job and sharing the risks of migration with their partners. When partners are assigned, the larger group reduces propensity to migrate by only 3 percentage points whereas in self-chosen groups, having to form larger group reduces propensity to migrate by almost 9 percentage points. This suggests that people may have trouble forming groups and finding the right set of partners with whom to migrate.

Migration Location: Placing restrictions on a migrant's destination decreased take-up of the migration incentive by 7.4 percentage points. The distance to the destination also appears to be an important consideration. For example, when faced with the option of migrating to two similar sized cities with comparable market opportunities, households were 12 percentage points were likely to migrate to the closer city. However, the size of the labor market is even more important: migrants are 6 percentage points more likely to take-up the offer when Dhaka is specified as the destination compared to when a nearby smaller town, Munshiganj, is offered.
 
Further analysis will provide more evidence on the key determinants of the migration decision as well as the longer-term effects of seasonal migration.

HIV Prevention Among Youths: Evidence from a Randomized Controlled Trial in Kenya

Policy Issue: 

The vast majority of new HIV infections occur in sub-Saharan Africa, where nearly 2 million people become infected with HIV/AIDS every year. Forty-five percent of these new HIV infections occur among people under 25 years old, and nearly all of them are due to unprotected sex. Ensuring the adoption of safer sexual behavior among youth is critical to keeping the new generations free of HIV.

The objective of this project is to examine, through a large randomized controlled trial, the impact of two HIV prevention strategies among a youth population in Kenya. The two strategies to be tested are: Voluntary Counseling and Testing for HIV (VCT), and condom distribution.

  • VCT is a critical entry point for access to HIV/AIDS treatment and care, and is being scaled up in many countries. But VCT could also be a powerful prevention tool. By providing personalized counseling as well as information about high-risk behaviors, VCT could motivate people to adopt safer sexual behavior and prevent transmission of HIV. This could be particularly important for adolescents and young adults, who typically have had their sexual debut but might not have perfect information about HIV risk. They are often still HIV-negative, and might be better able to change their sexual behavior.

  • Despite strong evidence of the biological effectiveness of the male condom as an HIV prevention strategy, condom use continues to remain low in many countries. Several factors, such as low availability, cost, lack of education about condoms and how to use them, and relationship factors contribute to low usage.  This study examines whether free and easy access to a large quantity of condoms can result in a reduction of risky behaviors and a decline in transmission of STIs among youth.

Context of the Evaluation: 

Kenya has the 10th largest HIV infected population in the world – nearly 7% of Kenyans are infected.1 The study is being implemented in four districts of Kenya’s Western Province (Butere, Mumias and Bungoma South and Bungoma East), spanning an area of approximately 50,000 square kilometers. Since about 45% of all new infections worldwide occur in youth aged 15-24 years, this study focuses on young people (both men and women). The sample is composed of approximately 10,000 youths (half of them female) who were 17 to 22 years old in 2009.

Despite the expanding implementation of VCT, an estimated 80% of Kenyans living with HIV are unaware of their status. Take-up of VCT in traditional settings (such as government health centers) is low. As such, several alternative models of VCT service provision, including mobile VCT, workplace VCT and home-based VCT are being explored. This study has used both mobile VCT and VCT within homes, and has achieved a very high take-up (85% of the people who were offered VCT accepted it).

Condom usage in Kenya is also relatively low. Only 24% of women aged 15-49 who reported multiple partners in the last 12 months used a condom during their last sexual encounter. Despite significant efforts to increase availability of free male condoms, recent data suggest that condom distribution remains low, with on average 0.71 condoms distributed per eligible person per year.

Details of the Intervention: 

A detailed baseline survey was administered to 10,420 youths (about ½ of them girls) between March 2009 and July 2010. All respondents were tested for Herpes (HSV-2) and for HIV (via anonymous linked testing) during the baseline. The prevalence rates for HSV-2 and HIV were 8.5% and 0.5%, respectively.

Among those surveyed at baseline, 25%  had been randomly pre-selected to be offered VCT, 25% had been randomly pre-selected to receive free condoms, and 25% had been randomly pre-selected to receive both VCT and free condoms.

Those pre-selected for VCT were offered VCT right after the baseline survey had been administered. Eighty-seven percent of them consented.  The consent rate was slightly higher among girls than among boys.

Those pre-selected for free condoms were offered three boxes of 50 condoms each, right after VCT (if also sampled for VCT) or right after the baseline survey had been administered. Not all respondents offered condoms took them. Seventy-one percent took all 150 condoms, 19% took only some of them, and the remainder, 10%, refused to take any condoms. The acceptance rate was much higher among boys. While 87% of boys took all the condoms and only 5% took none, only 52% of girls took all 150 condoms and 15% took none.

A follow-up survey will be conducted in 2011-2012. The survey will include detailed questions on sexual behavior, including sexual debut, number and type of partners, and condom use, as well as detailed questions on beliefs regarding HIV transmission, own HIV status, and own exposure to risk. Crucially, the follow-up survey will also include HSV2 and HIV testing.

Results: 

Results forthcoming.

1 CIA World Factbook, “Kenya”. Available at https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html

Vocational Education Voucher Delivery and Labor Market Returns in Kenya

How effective is vocational training in Western Kenya? This study leverages a longitudinal survey to examine the impact on individuals with different childhood and background characteristics. Individuals are invited to apply (and then randomly selected) for a tuition voucher. The study will also measure the demand for vocational training, and the difference between public and private sector training institutes. 

Policy Issue: 

Youth underemployment, especially among less educated populations, has the potential to create significant social unrest and perpetuate poverty. However, little is known about how best to help youth find jobs and smooth the school-to-work transition, particularly in less developed countries. One would-be tool for expanding the labor market opportunities in these settings is vocational education, which could help students learn a trade and acquire the skills needed to take advantage of employment opportunities, and create successful small businesses. However, credible research on the economic returns to vocational schooling in poor countries remains scarce.

Context of the Evaluation:

The introduction of free primary education in Kenya in 2003 prompted a large influx of pupils previously not enrolled in school. As these pupils complete their primary schooling in the coming years, Kenya will face unprecedented numbers of primary school graduates competing for limited seats in traditional secondary schools. Vocational education is one promising avenue for these youths. Increasing vocational education has the potential to help address unemployment issues for new primary school graduates by providing students with the skills needed for employment, even without obtaining a secondary school diploma. Vocational training may also help to address the problem of underemployment among youth who exited the academic schooling system before 2003. However, there is little empirical evidence on the impacts of vocational education on employment, salary, or consumption for individuals with different characteristics and backgrounds, for instance, by gender, family background, or individual cognitive ability.

Details of the Intervention:

The program was launched in 2008 with the recruitment of 2,163 out-of-school Kenyan youths (roughly 18 to 26 years old) who had participated in the Kenya Life Panel Survey. In order to be included in the sample, applicants were required to attend two meetings on the program, participate in a short survey regarding their expected returns, complete a form ranking their preferred schools and courses, and submit a letter of support from either a local official or a school official. Applicants were then entered into a lottery to determine if they would receive a vocational training voucher worth up to approximately US$325, an amount sufficient to fully, or almost fully, cover the tuition costs for most private vocational education programs and government-run rural village polytechnics.

Among the voucher winners, a randomly selected half received vouchers that could be used only in government supported public vocational training institutes, while the other half received unrestricted vouchers that could be used in either public centers or in the local private vocational training sector. Once winners were informed of which type of voucher they were eligible for, these young adults were able to access the tuition voucher, greatly reducing the cost (close to zero) of vocational education. The impact evaluation tracks these individuals (both voucher winners and non-winners) over time to evaluate take-up of vocational education, and its impacts on labor market and other life outcomes. The division of the treatment group into those with restricted versus unrestricted vouchers, combined with detailed panel data collection of individuals and institutions, will allow researchers to estimate the additional labor market returns of having access to the private vocational training sector. 

Results and Policy Lessons: 

Results forthcoming.

 

Incentivizing Safe Sex in Rural Tanzania

Researchers examined whether making cash payments conditional on testing negative for sexually transmitted infections (STIs) can improve safe sex practices among 18-30 year olds. Results reveal that giving cash payments of US$20, conditional on testing negative for sexually transmitted diseases, significantly reduced STI infection rates among young adults in Tanzania.

Policy Issue:

In 2009, approximately 2.8 million people were newly infected with HIV/AIDS, but it is estimated that only 40 percent of this population is receiving treatment. The extraordinarily high social and economic costs of the current HIV and AIDS crisis suggest that prevention may be far cheaper than treatment. However, existing prevention strategies, such as large-scale behavior change interventions, have had a limited impact on the HIV/AIDS infection rate. Conditional cash transfers (CCTs) have been used in a variety of settings as a means of incentivizing socially desirable behavioral change such as school enrollment or attending at preventive healthcare check-ups. Can CCTs be used to prevent people from engaging in unsafe sex?

Context of the Evaluation:

While the rate of HIV new infection has decreased substantially over the past decade, HIV/AIDS is still a major problem, particularly in sub-Saharan Africa, which bears an inordinate share of the global HIV burden. In Tanzania, where new incidences of HIV have declined over the past five years, 5.6 percent of the population is still infected with HIV/AIDS. Tanzania’s neighbors to the south have fared far worse - Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Zambia, and Zimbabwe are home to 34 percent of the global population living with HIV, and experienced 31 percent of all new HIV infections in 2009.[i] Effective policies to encourage preventive behavior are desperately needed in this area.

Description of the Intervention:

Researchers examined whether making cash payments conditional on testing negative for sexually transmitted infections (STIs) can improve safe sex practices among 18-30 year olds.

In the spring of 2009, 2409 individuals were randomly selected from the Ifakara Health and Demographic Surveillance System sample and then assigned to either a treatment group, where they would receive a periodic cash grant if they tested negative for STIs, or a comparison group. Participants in the treatment group were then randomly allocated into one of two sub-treatments: low-value vs. high-value CCTs. In the end, 1,124 participants were assigned to the comparison group; 660 were assigned to receive the low-value CCT of approximately US$10 per testing round; and 615 were assigned to receive the high-value CCT of US$20 per testing round.

All participants were tested for STIs at baseline and then every 4 months for one year. Participants in the two treatment arms were eligible to receive the cash transfer payment at each testing round if they tested negative for a set of curable STIs. The STIs tested were chlamydia, gonorrhea, trichomonas, and M. genitalium; all of these diseases are transmitted through unprotected sexual contact and therefore served as a proxy for risky sexual behavior and vulnerability to HIV infection. HIV testing was conducted at baseline and at month 12, but payments were not conditioned on those results because of local sensitivities.

Individuals in the treatment arms who tested positive for any of the curable STIs did not receive the conditional cash transfer but were eligible to continue in subsequent rounds after having been treated and cured of the infection. Anyone who tested positive for a STI, in either the comparison or treatment groups, was offered counseling and free STI treatment through health facilities of the district Ministry of Health.

Results and Policy Lessons:

After four and eight months in the program, there was no significant difference in the STI infection rate between either of the treatment groups and the comparison group. However, by month twelve, the high-value cash transfer led to a significant reduction in STI infection. Between month four and month twelve, the number of people testing positive for STI in the high-value conditional cash transfer arm decreased by 19 percent. In contrast, during the same time period, the number of STI-positive individuals increased by 19 percent in the low-value conditional cash transfer arm and by 13 percent in the comparison group.

The absence of significant impacts after four and eight months suggests that the impact of the conditional cash transfer may take time to materialize, perhaps because it is not easy to extricate oneself from complicated sexual relationships, or perhaps because participants needed time to become accustomed to (and trust) the incentive mechanism.



[i] UNAIDS (2010) “UNAIDS Report on the Global AIDS Epidemic.”

Training Women to Grow Microenterprises

Previous work in Sri Lanka has found very low returns to capital for female-owned microenterprises, which appears to be in part due to women operating businesses in female-dominated industries with low efficient scale and little scope for growth. This project aims to evaluate the role of business training and capital in getting women who are thinking about starting a business to start it in industries with greater scope for growth, and getting women in these low return industries to switch to more profitable sectors.

Separate business training courses are being offered to randomly-selected out of the labor force women who express an interest in entering the labor force in the next year, and to randomly-selected women currently in business in female-dominated low-return occupations. Half of those who complete the training will also receive a cash grant. One of the innovations of this work is not working with the existing clientele of a microfinance organization, but rather in seeing what the returns to such services are to the average poor woman. This informs us of the potential demand for such services, and can help identify the segments of the population not currently well-served by existing institutions.

Returns to Capital among Microenterprises in Ghana

A recent randomized experiment in Sri Lanka found very high returns to capital for male-owned microenterprises, but zero return to female microenterprises. We are replicating this experiment in Ghana, a country with high levels of female participation in self-employment, to see if the results generalize to a different cultural context. The project will also collect much more detailed information about gender roles and empowerment, and occupational choice to test between several explanations for low returns to female-owned enterprises.

The study is being conducted with 800 microenterprises, half male-owned and half female-owned. Half of these will be randomly given grants of 150 cedis (approximately $120), half in the form of cash grants and half as equipment for their enterprises.

David McKenzie
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