What broad lessons have we learned from 115 studies on unconditional cash transfers?

Globally, around 700 million people currently live in extreme poverty, and in recent years, unconditional cash transfers have emerged as a popular tool for poverty alleviation in low- and middle-income countries. This article presents findings from a meta-analysis of 115 studies, which shows that unconditional cash transfers have positive impacts on a range of key economic and social outcomes, including consumption, income, labour supply, and child health and education.

A version of this article first appeared on VoxDev.

As policymakers grapple with designing effective social protection programmes, evidence on the impacts of unconditional cash transfers (UCTs) is crucial for shaping future policy. It is important to understand how such transfers affect consumption and investment patterns, labour supply decisions, and other important socioeconomic measures, as well as how these effects may be enhanced or dampened by different aspects of programme design or contextual factors.

There now exist at least 115 studies reporting on randomised evaluations of 72 UCT programmes from 34 low- and middle-income countries. Our research (Crosta et al. 2025) leverages this body of work to estimate the impacts of UCTs on 13 primary outcomes as well as underlying factors (both contextual as well as programme design) influencing the estimated average effects.

Key findings on the impacts of unconditional cash transfers

Positive impacts on household income and consumption

Our meta-analysis results show that both lump-sum and stream UCTs lead to a rise in income and consumption.¹We find that monthly total household consumption rises by US$13.3 and US$17.4 for the median total transfer amount and median monthly tranche amount, respectively.

How households consume transfers depends on the type of transfer they receive (that is, lump-sum or stream transfers). Recipients consume more of stream transfers and invest more of lump-sum transfers, but the distinction is not as stark as we initially expected. For example, ongoing streams with a US$100 monthly tranche boost current consumption by US$83.7 compared to US$56.6 for completed stream programmes and US$42 for lump-sum transfers.

We measure investments by how households’ total asset holdings change. For each US$100 total transfer, completed stream and lump-sum transfers generate similar increases in total assets of US$26 and US$22 respectively, while ongoing streams yield no statistically significant increase.

Once stream transfers end, their impacts mirror those of lump-sum transfers. This is a striking result, underlined by the fact that we find sizeable positive effects of ongoing stream transfers on financial assets. This suggests that households are able, and choose, to save part of their transfers throughout the duration of the programme, to then invest it once the last tranche is paid out.

Long-term effects of unconditional cash transfers

The long-run impacts of UCTs differ depending on the transfer type. Our analysis is primarily based on estimates up to 48 months after transfers and shows that effects dissipate over time for both lump-sum and completed stream programmes. However, the effect of ongoing stream transfers rises over time. The long-term treatment effect on household consumption per US$100 monthly tranche is US$100.7, while the short-term treatment effect per US$100 monthly tranche is US$59.9. This suggests that households both consume and invest part of their monthly stream transfers, leading to increased income over time that feeds back into consumption.

Positive effects on labour supply and income

Dependency theories posit that cash transfers may demotivate income-generating activities, whereas theories based on capital market failures suggest that cash transfers may trigger income-generating activities and thus increase labour supply and income. We find evidence for the latter: On average, UCTs in our sample encourage, rather than discourage, individuals to seek work (extensive margin labour supply). The positive effect of UCTs on both income and labour force participation corroborates this result – labour force participation rises by 4.6 percentage points for a transfer equal to the median monthly tranche amount.

Moreover, we find that UCTs cause a shift in the composition of work with individuals moving from wage to non-wage labour. This suggests that UCTs foster entrepreneurship – a finding corroborated by a parallel effect on income. Further analysis shows this shift toward non-wage employment is driven in particular by lump-sum transfers and interventions targeting women.

Wide-ranging benefits

We find strong positive impacts of cash transfers on school enrolment, food security, psychological well-being, the stock of total and financial assets, and a height-for-age measure.

Compared to lump-sum programmes, ongoing stream transfers have significantly greater impacts on welfare-related outcomes, such as psychological well-being, food security and children schooling, though some of these effects attenuate after the last tranche.

Gender-targeted transfers

We consider a programme to be targeted at women if the cash is intentionally given to women exclusively or if more than 80% of the intended recipients are female. Programmes targeted at women produce greater consumption effects than programmes without any gender targeting. The difference appears to be driven primarily by greater food consumption. Female-targeted transfers also have significantly larger impacts on income than non-targeted programmes.

Behavioural nudges to use funds for children

We find that framed programmes that clarify the intended use of transfers as benefitting children have stronger impacts on total consumption and food-security related outcomes. However, this does not generalise to child-related outcomes such as school participation and anthropometrics.

Gains are consistent irrespective of the intervention context

We test whether average impacts differ across rural and non-rural settings and along country-level poverty rates and GDP (gross domestic product) per capita.

For most outcomes, differences between rural and non-rural areas are negligible, with two clear exceptions: non-rural programmes boost monthly income by US$36.9 per US$100 tranche (almost twice the US$17.9 gain in rural areas). On the other hand, rural programmes increase assets by US$22.2 per US$100 transferred, in sharp contrast to non-rural settings, where effects are statistically indistinguishable from zero.

Across the full range of observed poverty rates and GDP per capita, treatment effects remain essentially flat. We also observe no systematic heterogeneity (variation) by implementer (government versus NGO) or delivery modality (physical cash versus mobile money). In sum, UCTs deliver robust, context-invariant gains.

Poverty traps analysis: Diminishing or increasing returns with respect to grant size?

We consider “asset-threshold based poverty traps”, which describe a threshold level of initial assets a household requires to exit poverty. In the presence of barriers to saving and borrowing, households are unable to surpass this threshold and, therefore, remain mired in poverty. Researchers test for the existence of any such threshold by examining how the estimates of marginal (that is, per dollar of transfer) effects vary with respect to grant size, with larger grants more likely to place a household above the asset threshold and thus generate higher marginal returns.

Our estimates are close to linear with respect to grant size and, therefore, do not provide evidence for a threshold-based poverty trap. This does not imply that threshold-based poverty traps do not exist, since thresholds may differ across sites, across households, or may exist, but be outside of the range of values tested in the included studies. More granular research that allows for household-level variation may paint a different picture.

Benefit-cost analysis of unconditional cash transfers

We construct two simple models of future cash flows to estimate the returns of UCTs and compare the relative benefit-cost ratios of various programme designs. Assuming 24% administrative costs, we build on the modelling approach in Blattman et al. (2016) to estimate a benefit-cost ratio of around 0.8 for lump-sum and between 1.3 and 1.5 for stream transfers of varying duration (12, 24, 36, and 48 months). These figures consider only gains in consumption, and therefore likely underestimate real gains when considering productive investments, savings, and effects on mortality, or through positive spillovers onto neighbouring individuals not endowed with cash (along the lines of Egger et al. (2022)). On the contrary, our figures may provide an overestimate insofar as real benefits may deteriorate more rapidly over time than by the assumed 5% discount rate.

Policy implications of the evidence on unconditional cash transfers

Cash transfers are now part of the policymaker’s toolkit for poverty alleviation. Our analysis demonstrates that UCTs have robust positive impacts across most key economic and social outcomes: consumption, income, total assets, food security, psychological well-being, and children’s education and health. Importantly, cash encourages recipients to engage in productive work, especially as entrepreneurs. Average effects are also generally consistent across a large set of contexts, such as measures of poverty and economic development, rurality, whether government or NGO delivery, and whether mobile money or cash pay-out.

Crucially for policymakers, we report nuanced effects of key design features of cash programmes in our sample. UCT programmes targeted at women have larger consumption and income effects, while programmes with a child-focused framing tend to have a stronger effect on food security. Programmes designed to deliver more frequent tranches of cash, rather than one lump-sum transfer, more effectively improve food security, psychological well-being, and child education. Transfer frequency and timing also have important implications for consumption and investment responses.

Our results are critical for establishing when cash can be considered as a ‘default’ intervention, that is, an intervention which can serve to generate a reliable treatment effect on an outcome of interest (such as food security) that thus establishes a lower bar against which other interventions can be compared. If other interventions systematically perform better for a given outcome, then they can and should replace cash as the ‘default’ intervention for that given problem and context. The simplicity and scalability of implementation, combined with the breadth, depth, and persistence of impact, support cash transfers as a prominent and frequent tool in the policymaker’s toolkit.

Note:

Lump-sum transfers are typically one-off payments. Stream payments are cash payments repeated at regular intervals (most commonly monthly) over an extended period of time.