Association for Public Policy Analysis & Management

Child development is intricately tied to the family, but poverty is a major impediment to successful child and adolescent development and children living in poverty can suffer detrimental impacts to their health, human capital, and psychosocial well-being. These factors contribute to the persistence of poverty as disadvantaged children transition into their adult lives and raise their own children. Despite these negative consequences of early poverty, research has established increases in family income can improve children’s outcomes, but these are indirect effects because parents have the responsibility of making the spending and resource allocation decisions. While a number of parental behaviors pathways from income to child development have been found, there is little knowledge of these relationships in developing country settings or in context of actual poverty alleviation policies. This study will help address this gap in knowledge by addressing whether unconditional cash transfers given to families in extreme poverty help alter parental behavior in a way that supports enhanced child outcomes. This paper focuses on the mechanisms of parental investment and psychosocial well-being—a less developed pathway, but one being recognized for its importance with recent evidence incorporating behavioral economics into high poverty settings.

 Using experimental data from a cash transfer program in Malawi, this study will analyze the indirect impacts of cash transfers on schooling outcomes because accruing cognitive competencies are crucial for healthy child development and successful transition to adulthood. While the mechanism of parental investment traditionally ties child outcomes to spending decisions, the second pathway of parental psychosocial well-being suggests that if the cash transfer helps to ameliorate the stresses of poverty, improving psychosocial well-being, this will strengthen the capacity of parents to provide better care for their children and improve parenting behaviors. Hence, the goal of this research is to come to a greater understanding of how income from existing poverty alleviation policy can improve child development outcomes to enhance the prospects of ending intergenerational poverty. This is particularly important for understanding unconditional cash transfers since there are no conditions to attribute changes in behavior.

 The data for this study comes from an experimental impact evaluation of Malawi’s national Social Cash Transfer Program. After the baseline survey, households were randomly chosen to the treatment group (T) to receive transfers immediately or to the later entry control group (C). A follow-up survey concluded in February 2015 resulting in a panel of 3,369 households (7,192 school-age children). Using a difference-in-difference multivariate statistical model, we will compare the change between baseline and follow-up for T and C groups. Baseline results suggest that these parental behaviors are strong correlated to child schooling outcomes. Using panel data, the cash transfer is having positive impacts on child schooling outcomes including current enrollment, attendance, and temporary withdrawal. Moreover, caregiver psychosocial well-being is improved and families are spending more on their children. This preliminary evidence suggests that these mechanisms could help explain how income poverty alleviation impacts child human capital accumulation and potential for later-life success.