Indonesia: Do cash transfer recipients work less?
The answer to this controversial question, drawn on rigorous Randomized Control Trial evidence from Indonesia (evaluation of the Family Hope cash transfer Programme, PKH) and worldwide (Philippines, Morocco, Mexico, Nicaragua, Honduras) is “No”.
The underground assumptions tested were twofold: On the one hand, it is argued that social transfers could potentially have negative effects on labour supply mainly because recipients can afford to work less and Working may lower chance to get benefits. On the other hand, potential positive effects of cash transfers include the possibility it gives to recipients to escape from nutritional poverty traps, they can also be used for investments, allow the hiring of child care and funding seasonal migration.
The study concluded that for almost every program evaluated, there is no evidence supporting the idea that transfer recipients work less, irrespective of the size of the transfer. The results of this study and other recent evaluations conducted by J-PAL’s researchers on the design and targeting of social protection programmes have been released during a conference on 12 January 2016 in Jakarta, Indonesia.