Working Paper: NBER ID: w17456
Authors: Jesse M. Cunha; Giacomo De Giorgi; Seema Jayachandran
Abstract: This paper compares how cash and in-kind transfers affect local prices. Both types of transfers increase the demand for normal goods, but only in-kind transfers also increase supply. Hence, in-kind transfers should lead to lower prices than cash transfers, which helps consumers at the expense of local producers. We test and confirm this prediction using a program in Mexico that randomly assigned villages to receive boxes of food (trucked into the village), equivalently-valued cash transfers, or no transfers. The pecuniary benefit to consumers of in-kind transfers, relative to cash transfers, equals 11% of the direct transfer.
Keywords: cash transfers; inkind transfers; local prices; poverty alleviation; Mexico
JEL Codes: H40; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase demand for normal goods (D12) | increase prices (D49) |
| increase supply of goods (J20) | decrease prices (E31) |
| pecuniary benefit of inkind transfers (H49) | increase consumer welfare (D69) |
| geographically isolated villages (O18) | more pronounced effects of transfers (F16) |
| cash transfers (F24) | increase demand for normal goods (D12) |
| cash transfers (F24) | increase prices (D49) |
| inkind transfers (F16) | increase supply of goods (J20) |
| inkind transfers (F16) | decrease prices (E31) |