The Impact of Unconditional Cash Transfers on Nutrition: The South African Child Support Grant

Abstract

In light of research that has argued that the income elasticity of nutrition is low, the goal of a new generation of cash transfer programmes 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 programme rollout that created exogenous variation in the extent of CSG treatment received by beneficiaries in the province of KwaZulu-Natal, this Working 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 160 per cent and 230 per cent.