4,855 research outputs found

    Indirect effects of an aid program: how do liquidity injections affect non-eligibles' consumption?

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    Aid programs in developing countries are likely to affect both the treated and the non-treated households living in the targeted areas. Studies that focus on the treatment effecton the treated may fail to capture important spillover effects. We exploit the unique designof an aid program's experimental trial to identify its indirect effect on consumption for non-eligible households living in treated areas. We find that this effect is positive, and that itoccurs through changes in the insurance and credit markets: non-eligible households receivemore transfers, and borrow more when hit by a negative idiosyncratic shock, because of theprogram liquidity injection; thus they can reduce their precautionary savings. We also testfor general equilibrium effects in the local labor and goods markets; we find no significantchanges in labor income and prices, while there is a reduction in earnings from sales ofagricultural products, which are now consumed rather than sold. We show that this classof aid programs has important positive externalities; thus their overall effect is larger thanthe effect on the treated. Our results confirm that a key identifying assumption - that thetreatment has no effect on the non-treated - is likely to be violated in similar policy designs. Aid programs in developing countries are likely to affect both the treated and the non-treated households living in the targeted areas. Studies that focus on the treatment effecton the treated may fail to capture important spillover effects. We exploit the unique designof an aid program's experimental trial to identify its indirect effect on consumption for non-eligible households living in treated areas. We find that this effect is positive, and that itoccurs through changes in the insurance and credit markets: non-eligible households receivemore transfers, and borrow more when hit by a negative idiosyncratic shock, because of theprogram liquidity injection; thus they can reduce their precautionary savings. We also testfor general equilibrium effects in the local labor and goods markets; we find no significantchanges in labor income and prices, while there is a reduction in earnings from sales ofagricultural products, which are now consumed rather than sold. We show that this classof aid programs has important positive externalities; thus their overall effect is larger thanthe effect on the treated. Our results confirm that a key identifying assumption - that thetreatment has no effect on the non-treated - is likely to be violated in similar policy designs

    Migrating Away from a Seasonal Famine: A Randomized Intervention in Bangladesh

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    The rural northwestern districts of Bangladesh, home to 10 million people, experience a preharvest seasonal famine, locally known as Monga, with disturbing regularity. Surprisingly, outmigration from the Monga-prone districts is not all that common. This research tests whether migration could play any role in Monga mitigation. We implemented a randomized intervention that provided monetary incentives to individuals in Monga-prone regions to seasonally outmigrate during the pre-harvest season. We experimentally varied the conditionalities attached to the incentives, such as a requirement to form a group and migrate jointly (as opposed to migrating individually), sometimes assigning migration partners and the destination, and varying group size. This paper reports just the first stage results of this randomized intervention project, where we focus on household responsiveness to our incentive offers in terms of their decision to migrate. Our cash and credit incentives had a very large effect on migration propensity: over 40% of those receiving an incentive choose to migrate, whereas only 13% of control households do. This large effect is consistent with the presence of savings or borrowing constraints for these households, since providing information on wages and employment conditions at destinations only has a negligible 2 percentage point impact on the propensity to migrate relative to the control group.Monga, famine, Bangladesh, migration

    Migrating Away from a Seasonal Famine: A Randomized Intervention in Bangladesh

    Get PDF
    The rural northwestern districts of Bangladesh, home to 10 million people, experience a preharvest seasonal famine, locally known as Monga, with disturbing regularity. Surprisingly, outmigration from the Monga-prone districts is not all that common. This research tests whether migration could play any role in Monga mitigation. We implemented a randomized intervention that provided monetary incentives to individuals in Monga-prone regions to seasonally outmigrate during the pre-harvest season. We experimentally varied the conditionalities attached to the incentives, such as a requirement to form a group and migrate jointly (as opposed to migrating individually), sometimes assigning migration partners and the destination, and varying group size. This paper reports just the first stage results of this randomized intervention project, where we focus on household responsiveness to our incentive offers in terms of their decision to migrate. Our cash and credit incentives had a very large effect on migration propensity: over 40% of those receiving an incentive choose to migrate, whereas only 13% of control households do. This large effect is consistent with the presence of savings or borrowing constraints for these households, since providing information on wages and employment conditions at destinations only has a negligible 2 percentage point impact on the propensity to migrate relative to the control group.Monga, famine, Bangladesh, migration
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