A meta-analysis of 115 studies 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. Around 700 million people currently live in extreme poverty (World Bank 2024), and in recent years, unconditional cash transfers have emerged as a popular tool for poverty alleviation in low- and middle-income countries.
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 socio-economic 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. Lump sum transfers are typically one-off payments. Stream payments are repeated cash payments at regular intervals (most commonly monthly) over an extended period of time. We find monthly total household consumption rises by $13.3 and $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 (i.e. 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 $100 monthly tranche boost current consumption by $83.7 compared to $56.6 for completed stream programms and $42.0 for lump sum transfers.
We measure investments by how households’ total asset holdings change. For each $100 total transfer, completed stream and lump sum transfers generate similar increases in total assets of $26 and $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 sizable 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 treatment effects differ depending on the transfer type. Our analysis, which is primarily based on estimates up to 48 months after transfers, shows that transfer impacts 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 $100 monthly tranche is $100.7 while the short-term treatment effect per $100 monthly tranche is $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 wellbeing, food security and children schooling, though some of these effects attenuate after the last tranche.
Gender-targeted transfers
We consider a programme targeted to women if the cash is intentionally given to women exclusively or if more than 80% of the intended recipients are female. Programmes targeted to 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 programs.
Behavioural nudges to use funds for children
We find that framed programmes that clarify the intended use of transfers as benefiting 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 context of the intervention
We test whether average impacts differ across rural and non-rural settings and along country-level poverty rates and GDP 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 $36.9 per $100 tranche (almost twice the $17.9 gain in rural areas) whereas for assets, rural programmes increase by $22.2 per $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 by implementer (government vs NGO) or delivery modality (physical cash vs 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 (i.e. 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 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 modeling 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 untreated units (along the lines of Egger et al. 2022). On the contrary, our figures may provide an overestimate in so far 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, delivery organisations (government versus NGO) and modality (mobile money versus physical cash).
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, i.e. 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.
References
Abdul Latif Jameel Poverty Action Lab (J-PAL) (2020), ”Using cash transfers to improve child health in low- and middle-income countries.” J-PAL Policy Insights.
Blattman, C, E P Green, J Jamison, M C Lehmann and J Annan (2016), “The Returns to Microenterprise Support among the Ultrapoor: A Field Experiment in Postwar Uganda” American Economic Journal: Applied Economics 8(2): 35–64.
Crosta, T, D Karlan, F Ong, J Rüschenpöhler, and C R Udry (2025), ”Unconditional Cash Transfers: A Bayesian Meta-Analysis of Randomized Evaluations in Low and Middle Income Countries,” NBER Working Paper No. 32779
Egger, D, J Haushofer, E Miguel, P Niehaus, and M W Walker (2022), ”General Equilibrium Effects of Cash Transfers: Experimental Evidence from Kenya”, Econometrica 90(6): 2603-2643.
World Bank (2024), “Poverty,” Available at: https://www.worldbank.org/en/topic/poverty.