Cash Transfers, Children and the Crisis: Protecting Current and Future Investments

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Cash Transfers, Children and the Crisis: Protecting Current and Future Investments
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  Cash Transfers, Children and the Crisis: ProtectingCurrent and FutureInvestments Ariel Fiszbein Dena RingoldSanthosh Srinivasan SP DISCUSSION PAPER June 2011 NO. 1112    P  u   b   l   i  c   D   i  s  c   l  o  s  u  r  e   A  u   t   h  o  r   i  z  e   d   P  u   b   l   i  c   D   i  s  c   l  o  s  u  r  e   A  u   t   h  o  r   i  z  e   d   P  u   b   l   i  c   D   i  s  c   l  o  s  u  r  e   A  u   t   h  o  r   i  z  e   d   P  u   b   l   i  c   D   i  s  c   l  o  s  u  r  e   A  u   t   h  o  r   i  z  e   d 62984  1   Cash Transfers, Children and the Crisis   Protecting Current and Future Investments   Ariel Fiszbein, Dena Ringold, Santhosh Srinivasan June 2011 * Human Development Network, The World Bank; Email: afiszbein@worldbank.org, dringold@worldbank.org, ssrinivasan5@worldbank.org. Address for Correspondence: The World Bank, 1818 H Street NW, Washington DC 20433, USA  2 Abstract   Developing countries have responded to the multiple shocks from the food, fuel and finance crises of 2008-2009 with a mix of responses aimed at both mitigating the immediate impacts of the crises on households (and particularly children), and protecting future investments in human capital. While some countries have introduced new safety net programs, others have modified and/or expanded existing ones. Since many countries have introduced conditional cash transfers (CCTs) in recent years, these programs have been used as an important starting  point for a response. This paper aims to describe how conditional cash transfers have been used by different countries to respond to the crises (e.g. by expanding coverage and/or increasing benefit amounts), distill lessons about their effectiveness as crisis-response  programs, identify design features that can facilitate their ability to respond to transient  poverty shocks, and assess how they can complement other safety net programs.  ______________________________________________  JEL Classification:  I30, I31, I38  Keywords:   Conditional Cash Transfer, Crisis, Targeting, Safety Net, Child Welfare The authors would like to thank the information, comments and feedback provided by many colleagues, including Shaikh Shamsuddin Ahmed, Mohammed Ihsan Ajwad, Colin Andrews, Gaston Blanco, Amit Dar, Carlo Del Ninno, Aylin Isik-Dikmelik, Marito Garcia, Sara Giannozzi, Boryana Gotcheva, Rebekka Grun, Ufuk Guven, Xiaohui Hou, Theresa Jones, Jessica Leino, Phillipe Leite, Kathy Lindert, Emma Mistiaen, Edmundo Murrugarra, Azedine Ouerghi, Mansoora Rashid, Manuel Salazar, Andrea Vermehren, Ian Walker, William Wiseman and Xiaoqing Yu. All errors are the responsibility of the authors alone.    3 Contents I. Introduction: Cash Transfers and Crisis Response ......................................................................... 4 II. Cash Transfers and Crises .............................................................................................................. 6 III. Safety Net Responses ................................................................................................................... 11 IV. Reflections and Early Lessons ..................................................................................................... 15 IV. Conclusion .................................................................................................................................... 23 References ............................................................................................................................................ 24  4 I. Introduction: Cash Transfers and Crisis Response Developing countries responded to the multiple shocks from the food, fuel and finance crises of 2008 and 2009 with a mix of policy responses aimed at both alleviating the immediate impacts of the crises on households, and particularly children, and protecting future investments in human capital. The possibility of sharp reductions in living standards focused  policy makers, program managers and development agencies on finding tools to mitigate the costs of the crisis for the world’s poorest households. Many countries – developing and OECD alike – included safety net measures in national stimulus packages as part of the crisis response. This recent experience provides an opportunity to revisit questions such as – are cash transfers an appropriate response to transient shocks? How effective are they at  protecting household with children over the short and longer term? And how do cash transfers fit into the context of an overall social protection policy. Safety net programs have become increasingly widespread in low and middle income countries over the past decade. 1  As a result, many countries benefited from having existing  policies in place to respond to the crisis. While some countries introduced new programs, others modified or expanded existing ones, or did both. This paper explores how selected cash transfer programs that support households with children have been used by countries to respond to the crises in order to distill lessons about their effectiveness as crisis-response  programs, and to assess how they can complement other types of safety net programs. This review aims to inform the discussion about the potential role that these types of safety net instruments can play in crisis response and inform the readiness of countries to confront subsequent downturns. It draws from recently available information on country programs, including government documents, World Bank project documents, and donor papers. 2  The paper focuses on one element of the safety net response to the crisis in developing countries – conditional and unconditional cash transfer programs at the national level that are targeted to households with children. These programs are important policy measures, but are 1  Fiszbein, Schady, et al. 2009, note that 29 countries had conditional cash transfer programs (CCTs), an increasingly popular form of safety net program, in place in 2008. 2  This paper also builds on two recent studies of social safety nets and CCTs worldwide, Grosh, et al., 2009, and Fiszbein, Schady, et al., 2009.
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