Conflicting Choices: Lump Sum Transfer or Periodic Cash Transfer. Evidence from Sindh, Pakistan

Abstract

Evaluating the long-term impacts of social assistance programs is usually not possible as pure control groups dissolve into treated ones. This paper makes use of data where the treated and control groups remained mostly unmarred. We examine two types of Pakistani social assistance i.e., lump sum transfer (LST) versus unconditional cash transfer (UCT) and determine which is more effective in enhancing household income after a decade. The UCT has continued over time thus enabling us to see if there is any cumulative effect of this in comparison to the onetime LST received to the treatment group. The setup of initial randomization of beneficiaries to treatment and control status has not received any form of researcher intervention and thus continues to induce random variation. For evaluation, a cross-sectional survey is conducted in a district of the Sindh province of Pakistan. Propensity Score Matching is employed across recipient and control households to evaluate the treatment effects. The matching is done for households receiving LST and UCT and also between LST and non-recipients of any assistance. The empirical analysis suggests that the LST permanently increases the total household income. The difference in the household incomes of LST and UCT recipients, in the long run, is large and significant. The same is true for LST recipients and non-recipients of any form of assistance. Sensitivity analysis indicates no hidden bias. Considering limited fiscal space availability, understanding which type of social assistance can be more effective for social mobility, is an important public policy decision.