Re-thinking Social Protection: From Poverty Alleviation to Building Resilience in Middle-Income Households

Diego A. Vera-Cossio, Bridget Hoffmann, Camilo Pecha, Jorge Gallego, Marco Stampini, David Vargas, María Paula Medina and Esteban Álvarez

No 12925, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: We exploit an expansion in social protection to middle-income households to provide evidence on how middle-income households cope with economic shocks and how to build their resilience. We use a regression discontinuity design around the eligibility cutoff for a program that delivered monthly cash transfers mainly through bank accounts in Colombia. We find no impacts on food security, education, and health outcomes--the target outcomes of antipoverty programs. In contrast, program eligibility increases non-food consumption and reduces debt for routine expenses. Bank account ownership increases by 16%, and beneficiaries are more likely to borrow from formal lenders. Amid systemic and idiosyncratic shocks, the program prevents middle-income households from reducing non-food spending and acquiring debt for routine expenses. Moreover, when hit by severe shocks, beneficiary households substitute away from predatory loans. The results suggest that middle-income households are constrained by lack of insurance and that social protection can build middle-income households' resilience to shocks through both cash transfers and by integrating beneficiaries into formal credit markets.

Keywords: Basic income; Insurance; Cash transfers (search for similar items in EconPapers)
JEL-codes: I18 I38 O15 (search for similar items in EconPapers)
Date: 2023-06
New Economics Papers: this item is included in nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:12925

DOI: 10.18235/0004969

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