Transfers, Diversification and Household Risk Strategies: Can Productive Safety Nets Help Households Manage Climatic Variability?

Macours, Karen; Premand, Patrick; Vakis, Renos

Transfers, Diversification and Household Risk Strategies: Can Productive Safety Nets Help Households Manage Climatic Variability?

Karen Macours, Patrick Premand and Renos Vakis
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Renos Vakis: The World Bank - The World Bank - The World Bank

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Abstract: We present experimental evidence on a programme aimed at improving households' risk management through income diversification. The intervention targeted rural Nicaraguan households exposed to weather variability and combined a one-year conditional cash transfer with vocational training or a productive investment grant. Both complementary interventions provided protection against weather shocks two years after the programme ended. Households that received the productive investment grant also had higher average consumption levels. The complementary interventions facilitated income smoothing and diversification of economic activities. Relaxing capital constraints induced investments in non-agricultural businesses, while relaxing skills constraints increased wage work and migration in response to shocks.

Date: 2022-03
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Published in The Economic Journal, 2022, ⟨10.1093/ej/ueac018⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03672313

DOI: 10.1093/ej/ueac018

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