Long-term effects of cash transfers as a form of social protection by Anu Rantalaiho

Photo: Sasin Tipchai from Pixabay


Cash transfers as a form of social protection have become a widely used tool for mitigating the impacts of poverty throughout the world in recent years. Whereas they raise a variety of opinions among the policymakers and the public – sometimes purely intuitive and misleading, sometimes well-reasoned, and sometimes controversial, the evidence of their effectiveness for poverty and health outcomes in different circumstances is not yet fully known. In part possibly due to the rather short history of mainstreaming cash transfer programs, short-term outcomes are much more thoroughly investigated. However, some outcomes that are considered “short-term” may actually result in long-lasting benefits, such as increased participation in vaccination programs or increased contraception use, which highlight the need for further studies to conduct such interventions that would yield the best long-term effects. The most promising effects are reported in poverty headcount and poverty gap, but stunting, wasting, underweight, employment, and migration also have the potential to be impacted positively in the long term (Biscaye et al., 2017).

Özler (2020) suggests that cash transfers targeted to young women have provided the most long-lasting and sustainable outcomes, making targeting one of the key issues along with recognizing the most beneficial distribution channels. Study results show cash transfers have positive impacts on women such as a significant decrease in physical and non-physical abuse, marriages, multiple sexual partners, and pregnancies as well as significant increases in female decision-making power and contraception use (Biscaye et al., 2017; Bastagali et al., 2016). Considering these findings against most people who lack access to social protection being women (Jones, 2021), there is a clear need for focusing future interventions accordingly and evaluating the ongoing programs critically for their potential long-term effects. Furthermore, a recent study on cash transfers as a form of humanitarian aid among refugees claims that the program design does not affect the sustainability of the results and unconditional cash transfers in humanitarian settings do not bear longer-term effects for even 6 months after the end of the program (Altındağ & O’Connell, 2022). This raises the purpose of the program in question into the spotlight: is it possible or even necessary to aim for long-term effects in a humanitarian context, or should the temporary relief provided by unconditional cash transfers be accepted as a good result in such circumstances?

When comparing different cash transfer programs, most studies focus on whether or not the program is conditional. However, the effectiveness of the cash transfer programs depends on multiple variables along with conditionality, including the above-mentioned distribution channels, targeting, and context. A challenge in evaluating a development project such as a cash transfer program is that the individuals receiving the benefit cannot be observed as counterfactual (as if they hadn’t received the benefit), therefore a comparison group must be constructed, the consistency of which affects the results of the evaluation (Rawlings & Rubio, 2005). Recent examples of long-term evaluations – one at six months (Altındağ & O’Connell, 2022) and another at 12 years (Fiala et al., 2022) point to another challenge in measurement – capturing changes over time. Long-term effects may be detected only when a program has been applied for a long enough time (whatever time that may be), when it has been well targeted, and when it is context specific. Yet, some cash transfer programs which have proved to have positive long-term benefits have been criticized for their context specificity (Rawlings & Rubio, 2005) This, however, should be seen as an asset: if the concept is proved to be effective, with careful planning, theoretical positioning, and implementation science it is plausible to implement into other contexts as well. Complexity and context specificity must be recognized and therefore it must be accepted that not all programs cannot be directly compared to one another. Furthermore, to tackle the root causes of inequalities, gender-lens should be applied when planning and implementing cash transfer programs, and consequently, close monitoring, analysis, and evaluation are required to understand the mechanisms through which the programs may become successful also in long-term measures (Jones, 2021).

Although many studies show that the short-term effects of cash transfer programs, whether conditional or unconditional, are stronger than the long-term effects, cash transfers still hold potential for sustainable effects in mitigating poverty intergenerationally when applied context specifically, targeted, combined with other forms of social protection, and when the outcomes are viewed in a broad scale. The short-term benefits should not be overlooked as they hold the potential to have positive long-term consequences, but most importantly they alleviate immediate suffering.

To conclude, the long-term effects of cash transfers cannot be completely determined as the “what if” factor remains: what if the people would not have received the benefits they did? Even when they are compared to a control group in an experimental design, we don’t know their life trajectory without the benefit. It might be that their lives would be far worse.



Altındağ, O. & O’Connell, S. D. (2022). The short-lived effects of unconditional cash transfers to refugees. Journal of Development Economics, 160(January 2023). https://doi.org/10.1016/j.jdeveco.2022.102942

Bastagali, F., Hagen-Zanker, J., Harman, L., Barca, V., Sturge, G., Schmidt, T. & Pellerano, L. (2016). Cash Transfers: what does the evidence say? A rigorous review of programme impact and the role of design and implementation features. Overseas Development Institute, London. Retrieved from https://odi.org/en/publications/cash-transfers-what-does-the-evidence-say-a-rigorous-review-of-impacts-and-the-role-of-design-and-implementation-features/

Biscaye, P., Coomes, D., Ebeling, E., Favreau, A. R., & Madsen, T. (2017). Review of Evidence on Long-term Impacts of Cash Transfer Programs. Evans School of Public Policy & Governance Technical Report #359. Retrieved from https://epar.evans.uw.edu/sites/default/files/EPAR_UW_359_Review%20of%20Long-Term%20Impacts%20of%20Cash%20Transfers_11.13.17_0.pdf

Fiala, N., Rose, J., Aryemo, F. & Peters, J. (2022). The (Very) Long-Rung Impacts of Cash Grants during a Crisis. Ruhr Economic Papers, 961. Retrieved from https://www.rwi-essen.de/fileadmin/user_upload/RWI/Publikationen/Ruhr_Economic_Papers/REP_22_961.pdf

Jones, N. (2021). Gender and social protection. In E. Schüring & M. Loewe (Eds.), Handbook on Social Protection Systems (pp. 337-348). Elgar Online. https://doi.org/10.4337/9781839109119.00047

Rawlings, L. B., & Rubio, G. M. (2005). Evaluating the Impact of Conditional Cash Transfer Programs. Oxford University Press on behalf of the International Bank for Reconstruction and Development /The World Bank. https://doi.org/10.1093/wbro/lki001

Özler, B. (2020, February 06). How should we design cash transfer programs? Let’s Talk Development. World Bank Blogs. Retrieved on April 4, 2022, from https://blogs.worldbank.org/developmenttalk/how-should-we-design-cash-transfer-programs