Cash Transfers Reduce Poverty


Do direct cash transfers reduce poverty in poor regions?

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Direct cash transfers are generally found to be effective in reducing poverty in poor regions. The evidence from various research studies highlights the positive impact of these transfers:

  1. Programs like the Livelihood Empowerment Against Poverty (LEAP) have shown a significant decrease in poverty, with a 29% reduction in those earning below the lower poverty line (Ibrahim & Yeboah, 2014).

  2. Cash transfers are noted not only for reducing poverty but also for improving health and achieving other development-related outcomes (Heise, Lutz, Ranganathan, & Watts, 2013).

  3. Studies from Senegal and Tanzania demonstrate that social cash transfers significantly impact household welfare, thereby reducing poverty (Gassmann & Behrendt, 2006).

  4. Programs targeting children in poor households are particularly effective in poverty reduction (Barrientos & de Jong, 2006).

  5. Direct taxes and cash transfers are significant in reducing inequality and poverty, with varying degrees of effectiveness in different countries like Argentina, Brazil, Uruguay, Bolivia, Mexico, and Peru (Lustig, Pessino, & Scott, 2014).

  6. In rural Niger, cash transfers have led to sustained investments in assets and productive activities, particularly among the poorest, reducing poverty (Stoeffler, Mills, & Premand, 2016).

In conclusion, direct cash transfers are an effective tool for poverty reduction, improving household welfare, health, and livelihood in poor regions.