Impacts of Productive Safety Net Program on Household Welfare and Labour Supply in Rural Ethiopia: A Panel Data Approach

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Addis Ababa University


Using ERHS survey data of round six (2004) and round seven (2009) the study examines the impact of PSNP on five outcomes, namely, household welfare, food consumption, labour supply, asset holding, and private transfers. The paper applied double difference with fixed effect regressions to estimate the impacts. However, since beneficiary households might have differences to non-beneficiary households even before the program, propensity score matching technique on the baseline is also adopted to match participants with non-participants and to estimate the impacts without bias. Thus the double difference and fixed effect regressions are estimated across participant and matched control units within the common support. PSNP reduces the welfare, food consumption, and asset holding of beneficiary households compared to non-beneficiary households. It also crowds out private transfers to participant households. But it increases the supply of labour towards off-farm markets. In line with these results the study also found that family size has welfare reducing effect and credit increases the asset holding of households.



Productive Safety Net Program on Household Welfare