Title

Effect of Unconditional Cash Transfers on Health in Indonesia: Food Consumption, Medical Consumption, and Children's Nutrition

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Abstract

Cash and in-kind transfers play an important role in alleviating poverty in developing countries. Compared to in-kind transfers, cash transfers give recipients greater flexibility in how they spend the money. However, there are concerns that the recipients may use the cash transfers to purchase unnecessary goods such as alcohol and tobacco. This raises the question whether unconditional cash transfers are effective tools to alleviate poverty. Previous literature uncovers that cash transfers given in developing countries are used mostly for food consumption, which can increase children's nutrition and well-being. In Indonesia, the government initiated an unconditional cash transfer program called Bantuan Langsung Tunai (BLT) through which transfers were first made in October 2005 followed by a second round in 2008. The program targeted about 19.1 million households to receive Rp 100.000,00 (approximately $10) a month to help cope with an increase in gas prices. Literature regarding BLT's effect on health is limited. A quantitative study confirming its effects on children's nutrition has not been conducted yet. Thus, this research focuses on evaluating three types of effects on health: food consumption, medical consumption, and children's nutrition. I use data from the Indonesian Family Life Survey (IFLS), a longitudinal survey that has tracked over 7000 households across the country since 1993, to conduct my analysis using a propensity score methodology. Since the targeting of BLT recipients was based on a number of characteristics that the government considered as good identifiers of economic well-being, randomness was not implemented in the program. In this research, I create a control and treatment group from the data using the propensity scores to incorporate randomness. I estimate the average treatment effect on the treated (ATT) on food and medical consumption, as well as children's BMI z-score for each age group to evaluate the program's impact on nutrition.

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Apr 12th, 9:20 AM Apr 12th, 9:40 AM

Effect of Unconditional Cash Transfers on Health in Indonesia: Food Consumption, Medical Consumption, and Children's Nutrition

UC 327

Cash and in-kind transfers play an important role in alleviating poverty in developing countries. Compared to in-kind transfers, cash transfers give recipients greater flexibility in how they spend the money. However, there are concerns that the recipients may use the cash transfers to purchase unnecessary goods such as alcohol and tobacco. This raises the question whether unconditional cash transfers are effective tools to alleviate poverty. Previous literature uncovers that cash transfers given in developing countries are used mostly for food consumption, which can increase children's nutrition and well-being. In Indonesia, the government initiated an unconditional cash transfer program called Bantuan Langsung Tunai (BLT) through which transfers were first made in October 2005 followed by a second round in 2008. The program targeted about 19.1 million households to receive Rp 100.000,00 (approximately $10) a month to help cope with an increase in gas prices. Literature regarding BLT's effect on health is limited. A quantitative study confirming its effects on children's nutrition has not been conducted yet. Thus, this research focuses on evaluating three types of effects on health: food consumption, medical consumption, and children's nutrition. I use data from the Indonesian Family Life Survey (IFLS), a longitudinal survey that has tracked over 7000 households across the country since 1993, to conduct my analysis using a propensity score methodology. Since the targeting of BLT recipients was based on a number of characteristics that the government considered as good identifiers of economic well-being, randomness was not implemented in the program. In this research, I create a control and treatment group from the data using the propensity scores to incorporate randomness. I estimate the average treatment effect on the treated (ATT) on food and medical consumption, as well as children's BMI z-score for each age group to evaluate the program's impact on nutrition.