A considerable body of experimental economics research examines the
impacts of cash transfers (a treatment) on recipient households (the
treatment group). In many developing countries, though, cash transfers
are insignificant compared to other transfer mechanisms in terms of
their claim on public resources. For example, in Malawi, fertilizer
subsidies dwarf cash transfers, while next door in Zambia, the
government pays farmers prices well above market levels for their maize.
Yet no study to our knowledge has attempted to compare the full impact
of cash payments and other kinds of transfers on rural incomes and
welfare in low income countries.
Economic theory is unclear on the effectiveness of alternative transfer
schemes in a context of imperfect markets; thus, empirical impact
analysis is required to analyze, select and design income-transfer
mechanisms. It is not clear how to design a feasible randomized
experiment or econometric model to compare the efficiency of a variety
of alternative transfer schemes with both direct and indirect impacts on
a heterogeneous rural population.
This paper employs a simulation model of heterogeneous, interacting
agents to compare the impacts of direct payments and alternative
transfer mechanisms on production, incomes and welfare in rural Malawi
and Ghana. We calibrate our simulations to existing fertilizer subsidy
schemes in the two countries: the Malawi Agricultural Inputs Subsidy
Program (MAISP) and Ghana‘s temporary input subsidy program, initiated
in 2008 and continued every year since. In each country, we then compare
the input subsidy to two other transfer schemes: a market price support
for staples, similar to what historically has been implemented in both
countries, and cash transfers (the Malawi Social Cash Transfer Scheme,
SCTS, and Ghana‘s Livelihood Empowerment Against Poverty, LEAP).
Filipski, M.; Taylor, J.E. A Simulation Impact Evaluation of Rural Income Transfers in Malawi and Ghana. Food and Agriculture Organization of the United Nations, Rome, Italy (2011) 39 pp.
A Simulation Impact Evaluation of Rural Income Transfers in Malawi and Ghana