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Cash Transfers, Inefficient Household Bargaining & Investment in Children's Education

03.22.2017 @ 3:00 pm
Early Childhood Initiative Speaker Series featuring Robert Garlick

A large economic literature tests whether intra-household bargaining or decision-making is "efficient." Bargaining is considered efficient if there is no way to reallocate consumption and investment that would make some household members better off without making other household members worse off. We study intra-household efficiency in the context of Progresa/ Oportunidades, a large conditional cash transfer program in rural Mexico. We show that younger, but not older, households make systematically inefficient consumption and investment decisions. We also show that younger households invest systematically less of their cash transfers in children's education, controlling for household composition and economic resources. We argue that lower investment by younger households may be due to their inefficient bargaining, which effectively wastes some portion of the cash transfers. This finding can inform the design and evaluation of anti-poverty programs such as cash transfers.Robert Garlick is an assistant professor of economics at Duke University. He holds a PhD in economics and public policy from the University of Michigan. Garlick was born and raised in South Africa, where he studied economics, mathematics and philosophy at the University of Cape Town and managed a small education nonprofit.

Layko, Erika -

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