Pulling up from the depths of poverty: Do the Pantawid Pamilya cash transfers to the poor reduce their consumption expenditure shortfalls?

Abstract

With its emphasis on incentivizing beneficiary households to invest in the health and education of their children, the Philippines’ Pantawid Pamilyang Pilipino Program (4Ps) is expected to reduce future poverty. Yet, the cash transfers provided under the program have impacts on the household’s current income and consumption, and therefore, on contemporaneous poverty status. While the transfers may be inadequate to lift the poor out of poverty, these could pull them up from the depths of poverty. Using a panel dataset, we estimated the elasticity of the region-level income gap and poverty gap, both based on per capita consumption expenditures, with respect to 4Ps indicators, controlling for other factors. In general, the poverty gap is not responsive to 4Ps indicators. In contrast, the income gap is sensitive to changes in the total 4Ps cash transfers, with the effect moderated by the poverty incidence in the region. The policy implication is that, among the 4Ps beneficiaries, the poor could be granted greater cash transfers to pull them up from the depths of destitution.

JEL classification: D12, H53, I38