The impact of government cash transfer on household welfare and its influence on the adverse effects of health shocks: Kenya’s experience

Abstract

This study assessed the impact of the Government Cash Transfer (GCT) on households’ welfare and its influence on those who experienced health shocks. The endogenous switching probit technique that addresses potential selection bias in the mode was employed. The average treatment effects on the treated (ATTs) show that beneficiary households were likely to be more food-poor by 27.41 percent but less asset-poor by 40.11 percent. This can be attributed to delays in the disbursement of the cash transfer. The results based on the average treatment effect on the untreated (ATU) and average treatment effect (ATE) suggest that overall, GCT has the potential to improve household food consumption but not asset levels. A possible pointer that it may not be sufficient to improve these two welfare indicators concurrently. The real value of the GCT has also continued to diminish while the various expenditure items increase due to inflation. Further, the results for poor households that also experienced health shocks suggest that GCT has the potential to cushion households’ welfare against health shocks. This study proposes an increase in the amount of the GCT and a consideration to change the funds disbursement policy to monthly instead of bi-monthly.