The Welfare and Labor Market Impacts of the Livelihoods Intervention of the UPSNP

Improving the livelihoods of poor households and transitioning them to the labor force is a major challenge in Ethiopia. Productive safety nets that include livelihood grants and other support services could be a promising intervention toward this end. However, the evidence on the welfare and labor market impacts of such interventions is limited. This study provides empirical evidence on the development impacts of livelihood grants and support with a focus on welfare and labor market outcomes. The data for this study come from baseline and livelihoods endline household surveys undertaken between 2016 and 2022. The results show that self-employment (compared to wage employment) is the preferred livelihood modality selected by PW beneficiaries. Yet, few UPSNP beneficiaries are successful in establishing or expanding self-employment opportunities or engaging in wage employment. This is primarily because beneficiaries tend to utilize the livelihoods grant to cover regular and emergency household expenditures, especially during challenging economic times such as during the COVID-19 pandemic. The impact evaluation results show that livelihood grants and services have a positive impact on household business ownership but impacts on earnings, consumption, and assets are insignificant. These findings have important implications for the design of future similar interventions.