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Can cash transfers promote employment and reduce poverty in rural Africa? Will lower youth unemployment and poverty reduce the risk of social instability? We experimentally evaluate one of Uganda's largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start-up costs. Mid-term results after two years suggest four main findings. First, despite a lack of central monitoring and accountability, most youth invest the transfer in vocational skills and tools. Second, the economic impacts of the transfer are large: hours of non-household employment double and cash earnings increase by nearly 50% relative to the control group. We estimate the transfer yields a real annual return on capital of 35% on average. Third, the evidence suggests that poor access to credit is a major reason youth cannot start these vocations in the absence of aid. Much of the heterogeneity in impacts is u...
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Working Paper
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December 01, 2011
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Financial development is critical for growth, but its microdeterminants are not well understood. We test leading theories of low demand for financial services in emerging markets, combining novel survey evidence from Indonesia and India with a field experiment. We find a strong correlation between financial literacy and behavior. However, a financial education program has modest effects, increasing demand for bank accounts only for those with limited education or financial literacy. In contrast, small subsidies greatly increase demand. A follow-up survey confirms these findings, demonstrating that newly opened accounts remain open and in use 2 years after the intervention.
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Published Paper
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December 01, 2011
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We report on a study that used observations, conversations, and formal interviews to explore literacy instruction in 24 lower-primary classrooms in coastal Kenya. Specifically, we report the ways literacy instruction is delivered and how that delivery aligns with practices understood to promote reading acquisition. We find (1) prioritization of developing oral language skills over teaching the relationships between sounds and symbols, (2) enablers to literacy instruction that are the result of teachers’ efforts, and (3) constraints to successful literacy instruction as perceived by the teachers.We identify challenges and opportunities to improve literacy instruction in English and Swahili.
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November 15, 2011
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Conditional cash transfers (CCTs) have recently received considerable attention as a potentially innovative and effective approach to the prevention of HIV/AIDS. We evaluate a conditional cash transfer program in rural Malawi which offered financial incentives to men and women to maintain their HIV status for approximately one year. The amounts of the reward ranged from zero to approximately 3–4 months wage. We find no effect of the offered incentives on HIV status or on reported sexual behavior. However, shortly after receiving the reward, men who received the cash transfer were 9 percentage points more likely and women were 6.7 percentage points less likely to engage in risky sex. Our analyses therefore question the “unconditional effectiveness” of CCT program for HIV prevention: CCT Programs that aim to motivate safe sexual behavior in Africa should take into account that money given in the present may have much stronger effects than rewards offered in the future, and any effect of...
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November 02, 2011
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In 2009, the results from two microcredit impact studies in Hyderabad, India, and Manila, the Philippines were released to mixed responses (Banerjee, Duflo, Glennerster, and Kinnan 2010; Karlan and Zinman 2011). Some media declared microfinance a failure (Bennett 2009). Many in the microfinance community dismissed these randomized studies as too limited to be a true reflection of the entire sector. These first randomized studies caused a sensation because they challenged the dominant impact narrative for microcredit—a narrative that rests on loans to capital-constrained microentrepreneurs who earn a steep return on marginal capital and thus can repay a relatively high interest rate and reinvest to grow out of poverty—and the way in which that narrative had been universalized in the popular imagination. In fact, the results were more nuanced. What the microcredit studies really showed is that this model of microcredit works for some populations—those who successfully grow businesses—but...
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Report
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November 01, 2011
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This study reports the results of a randomized impact evaluation of a program designed to reach the poorest of the poor and elevate them out of extreme poverty. The program, which includes the direct transfer of productive assets (e.g. livestock) and additional training, was initially developed in Bangladesh, where it has reached thousands of beneficiaries, and is being piloted and studied in over seven countries. The results of this study, based on a pilot in India, indicate that this intervention succeeds in elevating the economic situation of the poorest. We find that the program results in a 15% increase in household consumption and has positive impacts on other measures of household wealth and welfare, such as assets and emotional well-being. Our results are consistent with the notion that the wealth transfer, in the form of asset distribution, directly increased consumption among beneficiary households through the liquidation of assets, but other sources of income, notably from s...
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Working Paper
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November 01, 2011
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Small incentives for parents, coupled with reliable services at convenient mobile clinics, increased full immunization rates sixfold. This approach was twice as cost-effective as improving service reliability without incentives. Full published paper is available here.
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Brief
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November 01, 2011
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Policymakers in Liberia face a dearth of evidence to guide their ambitious agenda of security sector reform, strengthening of property rights and the rule of law, and reconciliation. This lack of data is especially acute outside the capital and in areas where UN and police presence is limited.
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Brief
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October 25, 2011
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Enabling farmers to prepay for fertilizer when they had cash on hand was effective in promoting fertilizer adoption. Farmers had high demand for the ability to purchase fertilizer in advance. Among farmers who were offered advanced purchasing, 31 percent bought fertilizer in the first season of the program, and 39 percent bought it in the second season. The incentive offered to the farmers was small (free delivery), suggesting that farmers were attracted by the ability to commit to purchasing fertilizer in advance. Fertilizer adoption increased while advanced purchasing was offered, but once the program was removed, fertilizer usage went back to what it had been. Fertilizer adoption went up by 11-14 percentage points among farmers who were offered advanced purchasing. When the program ended, farmers in the treatment group reverted back to the same level of adoption as the comparison group. Prepayment had an impact on adoption comparable to a large subsidy during the growing season. Pro...
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October 01, 2011
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To the extent that students benefit from high-achieving peers, tracking will help strong students and hurt weak ones. However, all students may benefit if tracking allows teachers to better tailor their instruction level. Lower-achieving pupils are particularly likely to benefit from tracking when teachers have incentives to teach to the top of the distribution. We propose a simple model nesting these effects and test its implications in a randomized tracking experiment conducted with 121 primary schools in Kenya. While the direct effect of high-achieving peers is positive, tracking benefited lower-achieving pupils indirectly by allowing teachers to teach to their level.
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October 01, 2011
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We model farmers as facing small fixed costs of purchasing fertilizer and assume some are stochastically present biased and not fully sophisticated about this bias. Such farmers may procrastinate, postponing fertilizer purchases until later periods, when they may be too impatient to purchase fertilizer. Consistent with the model, many farmers in Western Kenya fail to take advantage of apparently profitable fertilizer investments, but they do invest in response to small, time-limited discounts on the cost of acquiring fertilizer ( free delivery) just after harvest. Calibration suggests that this policy can yield higher welfare than either laissez-faire policies or heavy subsidies.
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October 01, 2011
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How can new democracies and societies emerging from conflict encourage tolerance and dialogue, strengthen conflict resolution systems, and increase understanding of human rights? 
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Brief
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September 01, 2011
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Even very small incentives can encourage people to return for their HIV test results. However, for most people, learning status did not substantially change the number of condoms they purchased.
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August 01, 2011
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Policymakers and microfinance institutions (MFIs) often claim to target poor entrepreneurs who then invest loan proceeds in their businesses. Typically in nonresearch settings these claims are assessed using readily available but unverified self reports from client loan applications. Alternatively, independent surveyors could directly elicit how borrowers spent their loan proceeds. That too, however, could suffer from deliberate misreporting. We use data from the Peru and the Philippines in which independent surveyors elicited loan use both directly (i.e., by asking how individuals spent their loan proceeds) and indirectly (i.e., through a list-randomization technique that allows individuals to hide their answer from the surveyor). We find that direct elicitation under-reports the non-enterprise uses of loan proceeds.
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August 01, 2011
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Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in kind grants to male- and female-owned microenterprises in urban Ghana. Our findings cast doubt on the ability of capital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zero for women with initial profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the cash and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in kind grants are less robust. The diffe...
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Working Paper
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July 01, 2011
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The World Bank and other donors dedicate sizeable portions of their portfolios to community driven development (CDD) projects, yet until recently there has been little rigorous evidence regarding the efficacy of this approach. By emphasizing local participation in and control over project implementation, CDD has come to be seen as an efficient and accountable mechanism to deliver local public goods. But CDD aims to do much more than this. Through intensive, long term facilitation, CDD aims to strengthen local institutions, make them more democratic and inclusive of marginalized groups, and enhance the capacity of communities to engage in collective action. This evaluation tests the extent to which CDD achieved these goals in Sierra Leone.
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Report
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July 01, 2011
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2012 is IPA’s ten year anniversary, so we are reflecting not only on how we have grown this past year, but this past decade. We started with a core aim: to improve the way the world fights poverty by bridging the divide between research and action. We do this first by discovering the most effective solutions, and learning why they work. What psychological, environmental, and cultural factors encourage people to do what they do? When we know the why we can more effectively translate knowledge into practice and help scale up successful ideas in the right places.
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Annual Report
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July 01, 2011
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Increasing education for girls is an important policy priority in many developing countries, where secondary school enrollment often remains lower for girls than for boys. Some researchers and policymakers have argued that menstruation may be causing girls to miss a significant number of school days. At the maximum, some have estimated that girls might be missing as much as 10 to 20 percent of school days due to menstruation. Anecdotal evidence seems to support this. Girls report missing school during their periods and lacking access to modern sanitary products. In response, NGOs and sanitary product manufacturers have conducted campaigns to distribute sanitary products in the hope that this will remove a barrier to female education (CH Deutsch. 2007. “A Not-So- Simple Plan to Keep African Girls in School.” NYT Nov. 12). However, there has been little or no rigorous evidence on how much school girls miss due to their periods and the impact of providing sanitary products. Emily Oster an...
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June 01, 2011
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Microcredit institutions spend billions of dollars fighting poverty by making small loans primarily to female entrepreneurs. Proponents argue that microcredit mitigates market failures, spurs micro-enterprise growth, and boosts borrowers’ well-being. We tested these hypotheses with the use of an innovative, replicable experimental design that randomly assigned individual liability microloans (of $225 on average) to 1601 individuals in the Philippines through credit scoring. After 11 to 22 months, we found evidence consistent with unmet demand at the current price (a roughly 60% annualized interest rate): Net borrowing increased in the treatment group relative to controls. However, the number of business activities and employees in the treatment group decreased relative to controls, and subjective well-being declined slightly. We also found little evidence that treatment effects were more pronounced for women. However, we did find that microloans increase ability to cope with risk, stre...
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June 01, 2011
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Most academic and development policy discussions about microentrepreneurs focus on credit constraints and assume that subject to those constraints, the entrepreneurs manage their business optimally. Yet the self-employed poor rarely have any formal training in business skills. A growing number of microfinance organizations are attempting to build the human capital of microentrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty- to sixty-minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find little or no evidence of changes in ke...
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May 01, 2011

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