Assistant Professor of Economics Kathleen Lawlor
“My own research, and that of many others, shows that productive economic activity actually increases in response to cash transfers. In rural subsistence economies, for example, we find that recipients use part of the payments to expand their agricultural production and invest in their small businesses, leading to growths in income beyond the value of the cash transfer. Another common concern is that cash transfer recipients will blow the money on things they don’t truly “need,” like drugs, tobacco, and alcohol. Here again, the evidence does not support these degrading stereotypes of the poor. Instead we see that cash transfers have enabled poor households across the developing world to increase their consumption of nutritious foods and make important investments in their children’s schooling and health. Policymakers sometimes also think extending unconditional cash transfers will lead to economic stagnation by not rewarding work or entrepreneurial risk-taking. However, this notion is at odds with a basic principle of economics: one person’s spending is another person’s income. Putting cash into the poor’s hands can also increase the incomes of those in the community not receiving the payments, leading to economic growth.”
Read the full article at Asheville Citizen-Times.
Share
Permalink: