Essays On The Impacts Of Cash Transfers On Vulnerable Households: A Case Of BISP, Pakistan
Author: Neelum Nigar

This study analyses the impact of cash transfers on poor households’ vulnerability to idiosyncratic and covariate shocks in Pakistan. The analysis is done by examining the role of Benazir Income Support Program (BISP) in protecting households’ consumption vulnerability and child labor in times of shocks. We use a panel of poor households identified under BISP Survey (2011-2016). To this end, firstly we estimated logistic regression model of the probability of a shock conditional on independent variables and on households’ coping strategies. We then estimated the impacts of BISP’s cash transfers on households per adult equivalent consumption expenditure and children working hours in house chores, at farms and work for others using fixed effect model. The estimates reveal that that the targeted households under the program are exposed to idiosyncratic and covariate shocks simultaneously. Moreover, with low level of physical and financial assets owned by these households, they resort to coping strategies which are further damaging in nature i.e compromising on the quality and quantity of food consumption, selling out their assets and pushing their children towards child labor. In addition to this, the evidence clearly suggests that BISP has an insignificant impact in protecting household’s consumption against shocks- both idiosyncratic and covariate. Results mainly for food consumption reveal that BISP cash transfers appear ineffective in protecting the beneficiary households; there is a low change in their non-food consumption as compare to food consumption. The results reject the theories of risk-sharing and permanent income hypothesis in all cases. We also observed the marginal effects of different shock variables on adopting various responses. The results show that beneficiary households rely more on selling assets and less on adjusting food consumption to smooth consumption, while reinforcing the use of assets to cope with the given shocks. This suggests that such costly coping strategies employed by the poor households in response to given shocks have more adverse consequences as it lowers the future consumption, and pushes them further down the poverty line. Moreover, we also document evidence for statistically insignificant difference in the effects of shocks on child labor between BISP treatment and control group. However, for households with access to credit other than BISP transfers, we observe significant impact of BISP in mitigating child labor as a shock coping strategy. Findings from the fixed effect estimates suggest that the income effect of BISP transfers (unless other form of credit access is available) was not sufficient to affect household behavior with respect to the use of child work in response to shocks. The overall results of this study call for effective public policy efforts to help protect the poor and vulnerable from shocks. Moreover, the goals ought to preserve households’ food consumption, human capital and retain their livelihood in the face of shocks. The government needs to formulate public policies such that the poor and vulnerable households have access to formal (non-exploitative) credit along with effective social safety net programs, which would provide basic income support in times of income or non-income shocks. Supervisor:- Dr. Idrees Khawaja Co-Supervisor:- Dr. Nasir Iqbal

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Keywords : Cash Transfers, Household Vulnerability, Poverty Alleviation, Social Protection Programs
Supervisor: Muhammad Idrees Khawaja

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