2012-04, Macours, Karen, Premand, Patrick, Vakis, Renos

While climate change is likely to increase weather risks in many developing countries, there is little evidence on effective policies to facilitate adaptation. This paper presents experimental evidence on a program in rural Nicaragua aimed at improving households' risk-management through income diversification. The intervention targeted agricultural households exposed to weather shocks related to changes in rainfall and temperature patterns. It combined a conditional cash transfer with vocational training or a productive investment grant. The authors identify the relative impact of each complementary package based on randomized assignment, and analyze how impacts vary by exposure to exogenous drought shocks. The results show that both complementary interventions provide full protection against drought shocks two years after the end of the intervention. Households that received the productive investment grant also had higher average consumption levels. The complementary interventions led to diversification of economic activities and better protection from shocks compared to beneficiaries of the basic conditional cash transfer and control households. These results show that combining safety nets with productive interventions can help households manage future weather risks and promote longer-term program impacts.

2022-03-30, Macours, Karen, Premand, Patrick, Vakis, Renos

Despite increasing climatic variability and frequent weather shocks in many developing countries, there is little evidence on effective policies that help poor agricultural households manage risk. This paper presents experimental evidence on a program in rural Nicaragua aimed at improving households’ risk-management through income diversification. The intervention targeted agricultural households exposed to weather shocks and combined a one-year conditional cash transfer with vocational training or a productive investment grant. We identify the relative impact of each complementary package based on randomized assignment and analyse how impacts vary by exposure to exogenous drought shocks. The results show that both complementary interventions provide protection against weather shocks two years after the programme ended. Households that received the productive investment grant also had higher average consumption levels. The complementary interventions facilitated income smoothing and diversification of economic activities, as such offering better protection from shocks compared to beneficiaries of the basic conditional cash transfer and control households. Relaxing capital constraints induced investments in non-agricultural businesses, while relaxing skills constraints increased wage work and migration in response to shocks. These results show that combining safety nets with productive interventions relaxing skill or capital constraints can help households become more resilient and manage climatic variability.

2013-03, Macours, Karen, Premand, Patrick, Vakis, Renos

Interventions aimed at increasing the income generating capacity of the poor, such as vocational training, micro-finance or business grants, are widespread in the developing world. How to target such interventions is an open question. Many programs are self-targeted, but if perceived returns differ from actual returns, those self-selecting to participate may not be those for whom the program is the most effective. The authors analyze an unusual experiment with very high take-up of business grants and vocational skills training, randomly assigned among nearly all households in selected poor rural communities in Nicaragua. On average, the interventions resulted in increased participation in non-agricultural employment and higher income from related activities. The paper investigates whether targeting could have resulted in higher returns by analyzing heterogeneity in impacts by stated baseline demand, prior participation in non-agricultural activities, and a wide range of complementary asset endowments. The results reveal little heterogeneity along observed baseline characteristics. However, the poorest households are more likely to enter and have higher profits in non-agricultural self-employment, while less poor households assigned to the training have higher non-agricultural wages. This heterogeneity appears related to unobserved characteristics that are not revealed by stated baseline demand, and more difficult to target. In this context, self-targeting may reduce the poverty-reduction potential of income generating interventions, possibly because low aspirations limit the poor's ex-ante demand for productive interventions while the interventions have the potential to increase those aspirations. Overall, targeting productive interventions to poor households would not have come at the cost of reducing their effectiveness. By contrast, self-targeting would have limited poverty reduction by excluding the poorest.

2020-12, Barrera, Oscar, Macours, Karen, Premand, Patrick, Vakis, Renos

Parenting interventions have the potential to improve early childhood development. Text messages are considered a promising channel to deliver parenting information at large scale. This paper tests whether sending text messages about parenting practices impacts early childhood development. Households in rural Nicaragua were randomly assigned to receive messages about nutrition, health, stimulation, or the home environment. The intervention led to significant changes in self-reported parenting practices. However, it did not translate into improvements in children's cognitive development. When local opinion leaders were randomly exposed to the same text message intervention, parental investments declined and children's outcomes deteriorated. Since interactions between parents and leaders about child development also decreased, the negative effects may have resulted from a crowding-out of some local leaders.