How do cash transfers support newly-designated vulnerable populations and informal workers during an economic crisis? To help answer these questions, researchers are studying the effect of Ingreso Solidario (Solidarity Income), a new unconditional cash transfer in Colombia that was launched in response to the COVID-19 pandemic. Ingreso Solidario will assist up to 2.6 million lower middle-income households that were not previously enrolled in other existing social assistance programs, thereby expanding social protection coverage to lower middle-income populations. Researchers are evaluating the effects of the transfer on recipients’ income, food and nonfood spending, labor market participation, and take-up and use of digital financial products.

Policy Issue 

Cash transfers are direct payments, often from governments, made to groups of people based on defined eligibility criteria. In some cases, cash transfers are conditional on complying with specific requirements. Cash transfers have been used increasingly as a poverty-alleviation tool. For example, previous research found that providing unconditional cash grants to low-income households led to many benefits for recipients, including increased income, improved psychological well-being, and greater empowerment for women.1 Furthermore, research on cash transfers in economic emergencies and humanitarian crisis contexts suggests that cash-based assistance can sustain short-term household food security among food insecure populations.2

The COVID-19 pandemic has precipitated acute economic crises that disproportionately threaten the livelihoods of vulnerable populations worldwide, necessitating timely and comprehensive policy responses. From March to September 2020 alone, 212 countries planned or instituted over 1,000 new and expanded social assistance programs, including cash transfers, to assist their populations with the economic fallout from the pandemic.3 In several countries, the new Unconditional Cash Transfers (UCT) or Conditional Cash Transfers (CCT) have been either universal or reached beneficiaries whose incomes are often above the threshold to qualify for pre-pandemic established social protection programs. Research on the short-term impacts of these programs will allow policymakers to more effectively plan for long-term economic recovery. 

Context of the Evaluation 

In response to the pandemic, the Government of Colombia launched a series of additional social protection measures and emergency cash transfers through the pre-existing Colombia Mayor, Jóvenes en Acción, and Más Familias en Acción programs and through two programs, Ingreso Solidario and Compensación del IVA (VAT Compensation).4 Prior to the pandemic, Colombia’s social protection schemes covered 2.8 million families, 1.7 million low-income elderly persons, and 296,000 vulnerable youth.5 The social protection response to COVID-19 has been a multi-pronged approach, and by July 2020, social programs reached an additional 2.6 million vulnerable families (including informal workers).6  

The Ingreso Solidario program provides cash transfers7 to nonpoor but vulnerable households that are explicitly not beneficiaries of pre-existing social assistance programs. The Departamento de Prosperidad Social (DPS) uses a standard cutoff score based on the Sistema de Identificación de Potenciales Beneficiarios de Programas Sociales (Identification System for Potential Social Program Beneficiaries, SISBEN) to determine eligibility for Ingreso Solidario. The SISBEN is a multi-dimensional proxy means test, implemented through a national survey of income and assets, that determines if one qualifies for many of Colombia’s social support programs.  These results will allow DPS and DNP (Departamento Nacional de Planeación) to understand how the transfer assists beneficiaries in better withstanding economic difficulties, which will inform future social assistance policies and the viability of a permanent addition to the social safety net.

Details of the Intervention 

This study uses a regression discontinuity design (RDD) to estimate the impact of Ingreso Solidario on a number of outcomes, including beneficiaries’  income, household expenditures, employment activity, children's education, access to digital financial products, as measured by self-reported survey responses and matched administrative data. 

Researchers utilize the eligibility cut-off score to compare outcomes across two groups: households who were eligible to receive the transfers with scores just below the eligibility threshold and a comparison group who were ineligible for the transfer with scores just above the cut-off. Households that are recipients of social programs other than Ingreso Solidario were not included in the sample (consistent with criteria for receiving the transfer) to ensure that the comparison group is as close as possible to the recipients. This study design captures the impact of the cash transfers for households with scores near the cut-off and reflects the impact that policymakers could expect by expanding the program to additional households.

Researchers are measuring impacts through phone surveys of 3,600 households from the eligible and comparison group conducted in October, November, and December of 2020. The surveys are complemented with administrative data to evaluate the impact of the transfer on various outcomes, including labor market participation, financial participation, and household expenditures.   

Results and Policy Lessons 

Results forthcoming

Sources

1.  Haushofer, Johannes, and Jeremy Shapiro. 2016. “The Short-Term Impact of Unconditional Cash Transfers to the Poor: Experimental Evidence from Kenya.” The Quarterly Journal of Economics. 131 (4): 1973–2042.

2. Doocy, Shannon, and Hannah Tappis. 2017. “Cash-Based Approaches in Humanitarian Emergencies: A Systematic Review.” Campbell Systematic Reviews 13, no. 1 (2017): 1–200. https://doi.org/10.4073/csr.2017.17.

3. http://documents1.worldbank.org/curated/en/295321600473897712/pdf/Social-Protection-and-Jobs-Responses-to-COVID-19-A-Real-Time-Review-of-Country-Measures-September-18-2020.pdf

4.  https://www.poverty-action.org/study/impact-emergency-cash-assistance-during-covid-19-pandemic-colombia

5.  https://sdgintegration.undp.org/countries/colombia

6.  https://ingresosolidario.dnp.gov.co/

7.  Ingreso Solidario provides three monthly transfers of 160,000 Colombian pesos (this is about 18% of the minimum monthly wage), through cash or digital transfer, with an ultimate target of 3 million beneficiaries