19 September 2011

Can Cash Handouts Lead to Economic Growth?

Probably not. And it probably doesn't matter, because the moral case based on evidence of effectiveness in alleviating poverty (and lack of evidence, as far as I am aware, that cash blunts work incentives), should be powerful enough.

But for those who don't dig the whole equity thing, Stefan Dercon has a new paper proposing how social protection could contribute more to overall economic efficiency and growth.

  • Social protection focusing on children, especially before the age of five (there are large documented life-time earnings/productivity gains for healthier and better nourished young children)
  • Social protection measures to make migration smoother and cities more attractive places to live for low skilled workers, possibly via urban workfare schemes focusing on urban community asset building (cities are engines of growth. A promising similar idea being tested by Mushfiq Mobarak is providing an insurance policy for migrants - a free return bus pass)
  • Social protection targeted at adolescents and young adults, including transfers conditional on training focused on urban labour market transitions (something to tackle all that youth unemployment). 

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