As part of the Brown Bag Lunch series, the International Economics Department at the Graduate Institute is pleased to invite you to a public talk given by Paula Gonzalez Martinez, PhD student in Development Economics. She will present her paper, coauthored with Jed Friedman, Markus Goldstein and Sreelakshmi Papineni:

Cash Is Queen

Local Economy Growth Effects of Unconditional Cash Transfers to Women in West Africa

Abstract: This paper studies the direct and indirect effects of unconditional cash transfers on women’s labor supply and household welfare in Northern Nigeria. The study is conducted in an ultra-poor, rural setting where women face restrictive gender norms around work. In a cash transfer randomized controlled trial nested in a larger quasi-experimental design, we find women entering the labor market by starting rural non-farm businesses. Women assigned to receive a cash transfer start businesses in the short-term, where they are 6 percentage points more likely to own a business relative to non-beneficiary women in non-program villages, measured one month after the cessation of the transfer payments. In the longer-term, we find not only do cash transfer payments benefit the immediate recipients; they permeate the local market influencing non-beneficiary women in the community to start businesses too. Over one year after the cessation of cash transfer payments, we find substantial growth in business entry by beneficiary women plus positive local spillovers to non-beneficiary women (+22 pp cash transfer effect and +20 pp indirect effect on female business ownership, relative to non-beneficiary women in non-program villages). Our results are consistent with general equilibrium effects through market mechanisms where the aggregate demand shock associated with the introduction of the cash transfers led to a boost in business creation and profits among non-beneficiary women in the local neighborhood where cash transfers were paid. The positive impacts beyond the direct effects on cash transfer recipients suggests that alleviating liquidity constraints can lead to longer run growth through market behavior. The paper goes on to explore the mechanisms through which these large labor gains occur and concludes that women are acting strategically by taking advantage of agglomeration effects within their local market by operating complementary types of businesses in spatially close proximity to each other. The majority (73%) of women also choose to operate a business near their home which doesn’t require travelling out to the fields, and therefore may not require violating restrictive social norms. We do not find evidence of any local price effects.