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AEC 2010 - The Impact of Social Cash Transfers on Household Economic Decision Making and Development in Eastern and Southern Africa


Apart from their well-documented impacts on human development and poverty alleviation, recent evidence suggest that social cash transfer programs may foster broader economic development impacts. These impacts come through changes in household behavior and through impacts on the local economy of the communities where the transfers operate. The householdlevel impacts follow three main documented channels: (1) changes in labor supply of different household members, (2) investments in productive activities that increase the beneficiary household’s revenue generation capacity, and (3) prevention of detrimental risk-coping strategies. Using quasi experimental impact evaluation data from Kenya and Malawi, we identify the impact of cash transfers on income-generation strategies and productive activities. Beneficiary households seem more likely to invest in durable goods in Kenya, and in small animals, tools in Malawi. In Kenya, some forms of child labor decrease. In Malawi, adults seem less likely to engage in casual agricultural labor although data limitations prevent us from ascertaining which activities they are spending more time on, probably on their own plot. Program effects vary with age and gender of household head and with number of children. Linking these programs with agricultural development and credit/insurance programs may help strengthen these nascent impacts and improve the sustainability and resilience of household income-generation strategies.

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