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The most disadvantaged can improve their lives. If you want to know more, inquire with Ecuador

In Ecuador, the BDH can be described as a money payment provided to families who are extremely poor every month, so the children attend school regularly and medical clinics. Since 2003, every family that is a beneficiary has been receiving $15 each month, regardless of size (Ecuador utilizes its version of the US dollar). The amount increased to US$30 by 2007, then US$35 in 2009, and then US$50 in 2013.

In contrast to similar programs elsewhere in Latin American countries, including Mexico’s Prospera and Brazil’s Bolsa Familia, where supervision of student attendance and compliance with nutrition is very rigorous, In Ecuador, the conditionality of the program is more relaxed.

It is well-known that cash transfers can positively affect the accessibility to high-quality healthcare and education services, according to evidence from thirty developing countries. It is also known that they enhance the supply of labor and familial assets, enhance social networks, and increase the local markets.

However, there is a lack of research in relation to the long-term consequences of these transfers.

For indigenous women and girls in Ecuador, poverty isn’t their primary barrier to mobility. Dottie Day/FlickrCC BY

Based on data from the administrative panel over ten years, the UNU Merit study looked at the main factors affecting socio-economic mobility within Ecuador through an index of welfare that is multivariate, which demonstrates the importance of different aspects of structural poverty.

It sought to answer crucial macro-level issues, like whether having more cash, either with or without conditionality, really improves the mobility of people experiencing poverty. Does an assured basic income create the security that people need to be free to pursue their dreams?

The preliminary results were published in a January 2017 work paper written by Franziska Gassmann and me. We proved that the BDH has an impact on the long-term health of families and individuals.

In the years 2009-2014 households who received the BDH have seen their welfare scores rise which means that their net worth increased, as did their capacity to grow in the ranks of society in both relative and absolute terms – between 12.5% to 13.6 percent when contrasted with those who didn’t get BDH cash transfers.

Our research shows that the BDH enhances the well-being of recipients not just for a short time; in the long term, it promotes social mobility for Ecuador’s most vulnerable segments.

More money, less problems

Our study also found that welfare growth is in line with the increase in cash transfers. A 10% increase in BDH total amount transferred, which is an additional 3 dollars per month, is correlated with an increase in welfare from 0.79 percent to 0.86 percent.

The increase is greater in households that have been granted the Human Development Loan ( Credito de Desarrollo Humano, CDH), a variant of the BDH that provides a yearly amount of US$600 with the intention of encouraging productive investment. Households that received this wealth accumulation-oriented transfer have a 4% to 4.2% higher welfare index than those that receive only the BDH.

For policymakers and economists, our findings from research should prove that cash transfer programs should not be considered merely an opportunity to provide the minimum standards of consumption of food as well as education and access to health services for the most disadvantaged in society. Instead, they serve as an instrument to promote long-term social mobility.

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Jane S. King

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