Cash Handouts: Friend or Foe?

70% of countries tracked by the World Bank give unconditional cash handouts as part of their aid programs; 40% set conditions for those receiving cash.
 
Both have been shown to reduce poverty—but critics fear cash grants can backfire by, say, triggering inflation or disadvantaging business owners by giving their competitors a boost.
 
A new working paper allays some of these fears. When randomly chosen rural households in Kenya received cash grants, local GDP rose by $2.60 for every dollar received.  

Not only recipients’ consumption—but their neighbors’— rose 13%. Non-recipients’ wages increased, while prices remained the same.
 
The Economist

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