UC Berkeley researchers find cash transfers help rural Kenyan economies

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UC Berkeley researchers found that cash transfers to rural Kenyans led to improvements in the local economy, according to an economic study.

Researchers gave more than 10,500 households across 653 randomized villages in rural Kenya a one-time cash transfer of about US $1,000 to study the effects of the transfers on the villages’ economies, according to the study.

“While numerous studies have shown benefits of cash transfer programs to recipient households, there has been much less work on how these programs affect the broader local economy,” said Michael Walker, campus economics graduate student and an author of the study, in an email.

Walker added that the study shows the effects of cash transfer programs on local economies, particularly the effects on individuals who do not directly benefit from the cash transfers.

The study was measured by two methods, according to Walker. Data about the economy from cash transfer recipients and noncash transfer recipients was collected and used in a randomization method by researchers.

The randomization divided villages receiving cash payments into high and low-saturation sublocations, Walker added.

“In high saturation sublocations, 2/3 of villages were randomly assigned to treatment to receive the cash transfer program, while in low saturation sublocations, only 1/3 of villages received the program,” Walker said in the email. “In treatment villages, all households meeting a basic means test received the program.”

The study revealed cash transfers benefited households that received the transfers and improved economic opportunities for households that did not receive cash transfers.

Walker is, however, cautious to apply the study’s findings to other communities. He added that there are a “number of low-income settings” in sub-Saharan Africa that “look similar” to the study’s context where cash transfers “may produce wider benefits.”

Contact Blake Evans at [email protected] and follow him on Twitter at @Blake_J_Evans.