Local economy effects of social cash transfers

This paper reports on the main findings from a study examining the incidence and significance of local economy effects of social cash transfers in developing countries. The study hypothesises that the presence of local economy effects from social transfers is consistent with improvements in household consumption and asset holdings by noneligible households in affected areas. The quasi-experimental nature of the data collected for the purposes of evaluating the impact of PROGRESA enables the comparison of household consumption and asset holdings among similar non-eligible households in treatment and control areas. The analysis finds that non-eligible households in treatment areas show significantly higher levels of household consumption and asset holdings following the introduction of PROGRESA, compared to non-eligible households in control areas. These results are interpreted to suggest that transfers in p