Association for Public Policy Analysis & Management

Cash transfer programs targeted to poor households may increase price levels, especially if local markets are not fully integrated into larger regional markets. Using data from the evaluation of a Philippine cash transfer program, we show that the prices of perishable protein rich foods exhibit moderate increases after program introduction. Likely as a result, anthropometric measures of child health, notably stunting rates, worsen among non-beneficiary children. These effects are not short-run but persist up to 31 months after program introduction. Failing to consider the effect of such local price increases on non-beneficiaries’ wellbeing can overstate the impact of cash transfers. For very poor areas, where household targeting of cash transfers covers a majority of the households, geographic targeting may avoid the consequences of local market price spillovers and consequently prevent nutrition and longer-run impacts at little additional cost.