Cash Transfers, Risk Management and Asset Accumulation: Policy evaluation for rural poverty reduction in Nicaragua

Problem & Objective
A lack of minimum endowment of assets can cause households to be stuck in long-term poverty traps, and negative shocks can cause households to fall below the minimum asset threshold necessary to pull themselves out of poverty. Conditional cash transfers are one mechanism to help increase asset endowments, as well as investment in education, health and nutrition. This project aims to look at the long-term impact of a cash transfer pilot program, and whether it increases the asset base and/or facilitates income diversification. It will also look at the changes in household’s return on productive activities following their participation in the program.

Research Context
The project will look at a recently complete pilot program by the Ministerio de la Familia (MIFAMILIA) in Nicaragua. This program combings a traditional conditional cash transfer program with additional interventions aimed at increasing the asset base and risk management capacity of rural poor households exposed to weather risk (droughts).

Policy Relevance
By providing evidence on the effectiveness of different types of interventions, this project will inform the recently inaugurated government team in charge of social policy and rural development, and inform the debate surrounding the restructuring of existing initiatives. The project addresses a number of the policy priorities of the new Nicaraguan government, including reduction of hunger and extreme poverty, malnutrition, gender empowerment and micro-finance, and will shed light on discussions regarding the effectiveness of conditional cash transfers as opposed to other programs, such as food aid.

Publications

• BASIS Brief no. 2007-01. Evaluating and Improving Interventions for Asset Accumulation, Risk Management, and Rural Poverty Reduction in Nicaragua, by Karen Macours, Renos Vakis and Vanessa Castro. July 2007. 4 pages. [Adobe Acrobat PDF 56K]

• Macours, Karen, and Renos Vakis. 2008. "Changing households' investments and aspirations through social interactions: Evidence from a randomized transfer program in a low-income country." Johns Hopkins University and World Bank Working Paper Report Number: 45211.

• Del Carpio, Ximena, and Karen Macours. 2008. "Leveling the intra-household playing field: Compensation and Specialization in Child Labor Allocation." World Bank Policy Research Working Paper Report Number: WPS4822

• Publications aimed at dissemination of market and community information gathered during qualitative fieldwork in Spanish: one children's tale (la panadera emprendadora), two comics (Como comprar y vender; Como invertir tus ganancias), and two informational brochures. Contact PIs for information.

• Project Proposal (March 2007)

Trip Reports

• Nicaragua August 2007 , 4 pages [PDF, 25K]