In light of research that has argued that the income
elasticity of nutrition is low, the goal of a new generation of
cash transfer programs to boost the nutrition of poor families'
children may seem surprising. This observation applies especially
to South Africa's unconditional Child Support Grant (CSG) in which
cash grants are made to families with no strings attached. However,
in contrast to the market-generated income increases that identified
low nutritional elasticities in the earlier studies, the income
increases generated by the South African cash transfers are almost
exclusively assigned to women. Taking advantage of a slow program
roll-out that created exogenous variation in the extent of CSG treatment
received by beneficiaries, this paper utilizes the continuous treatment
method of Hirano and Imbens (2004) to estimate the impact of these
transfers on child nutrition as measured by child height-for-age.
Large dosages of CSG treatment early in life are shown to significantly
boost child height. Drawing on the best estimates in the literature,
these estimated height gains in turn suggest large adult earnings increases for treated children and a discounted rate
of return on CSG payments of between a 160% and 230%.
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