Cash transfers do not encourage people to work less – new report

27 July 2016

As cash transfer programmes become increasingly popular among developing countries, a new report by the UK’s leading think-tank on development matters found strong evidence that they bring benefits including higher school attendance, greater use of health services and reductions in poverty.

However, the report, ‘Cash transfers: what does the evidence say’, also found there was little evidence to suggest they discourage adults from working.

Report author Francesca Bastagli, who leads the Social Protection programme at ODI, said: ‘The idea that providing money to those in need discourages people from working is simply not borne out by the evidence.

‘For more than half of the studies we looked at, cash transfers had no impact on employment levels, while most of those that did report a significant effect actually found an increase in work participation.

‘There is also strong evidence that cash transfers bring other benefits, such as reducing poverty and improving the use of health services. It is clear such programmes can be a powerful policy instrument that delivers real outcomes for the world’s poorest people.’

Researchers analysed evidence on the effects of cash transfers through a rigorous review of 165 studies, spanning 15 years, looking at 56 cash transfers programmes across 30 low- and middle-income countries.

The review found robust evidence that cash transfers can help foster peoples’ economic autonomy, by increasing their savings, investment in livestock and, to a lesser extent, agricultural assets.

At the same time there is also evidence to suggest they play a role in women’s decision-making power and choices – although they do not always reduce emotional abuse or controlling behaviour by men.

ENDS

Notes to editors

  • The report ‘Cash transfers: what does the evidence say?’, is the largest and most comprehensive review of its kind to-date, synthesising evidence on 35 indicators across six outcome areas: monetary poverty; education; health and nutrition; savings, investment and production; employment and empowerment
     
  • Currently, there are 130 low- and middle-income countries with at least one unconditional cash transfer programme, including poverty-targeted transfers and old-age pensions.
     
  • In addition, 64 countries have at least one conditional cash transfer programme, up from two countries in 1997 and 27 countries in 2008

For more information or to arrange an interview with the report author, please contact Miles Barter on 07808 791265 or [email protected].