Comparing the Productive Effects of Cash and Food Transfers in a Crisis Setting
Publication date: 2018-09
Innocenti Working Papers
No. of pages: 11
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The productive impacts of transfer programmes have received increased attention. However, little is known about such effects in emergency and crisis settings. Even less is known about whether transfer type – a food basket or a cash grant – influences the productive potential of such transfers. Theory suggests that, while cash transfers can relieve liquidity constraints associated with investments, subsidized food provision, by acting as a form of insurance, may prevent households from retreating to conservative income-generating strategies during volatile periods. Using a randomized field experiment in Yemen, we contrast the effects of transfer modality. The results demonstrate a modest productive impact of both modalities and suggest a role for both liquidity and price risk channels. Cash transfer recipients invested relatively more in activities with higher liquidity requirements (livestock), while food recipients incorporated higher-return crops into their agricultural portfolios.