A cash transfer programme ‘Livelihood Empowerment against Poverty’ has been implemented with the aim of addressing poverty and vulnerability in Ghana. This study looks at the impact of this conditional cash transfer programme on households’ supply of labour for agriculture, paid employment, and non-farm enterprise. It used a difference-in-difference approach to examine the effects of the programme on 3,008 households to learn about their labour supply decisions. Factors considered in the model were mainly household and beneficiary’s characteristics.
The study finds that the cash transfer leads to a reduction in agricultural labour supply but increases that of paid employment. A careful look at the subsequent targeting of beneficiaries is recommended.
Key findings:
- The study found that the programme decreased the total labour hours worked, specifically in agriculture, but increased labour supply for paid employment. However, there was no impact of the programme on the hours worked for non-farm businesses. Both men and women reduced their labour supply as a result of the conditional cash transfer programme.
- Other factors like income from agriculture, paid employment, and sales from non-farm produce increased the total household labour supply but these same factors and transfers to a household reduced the hours worked in agriculture. Transfers to households generally reduced labour supply in total, in agriculture, in paid employment, and in the hours worked for non-farm enterprises. The health status of household members, having male members in the household coupled with larger household size and larger household cultivated land sizes increased the hours worked in agriculture. These same factors, with the exception of having males in the household, also increased the total hours committed to labour.
- Households with males increased the hours worked in agriculture and in paid employment but reduced the hours worked for non-farm enterprises. Households with handicapped beneficiaries reduced the household labour supply in agriculture while households with beneficiaries who are care-givers of OVC increased the hours worked in paid employment. Households with electricity tended to increase their labour supply for non-farm enterprises.
- Generally, the health of the household and household size increased the hours worked while transfers to a household reduced the household’s hours of work. Ardington et al. (2009) favour transfers in the form of pension schemes, concluding that these have a positive effect on labour supply, but we find rather negative effects of the LEAP programme on the hours worked by a household.
- The findings suggest that cash transfers lead to a reduction in household agricultural labour supply. This could extensively come from the fact noted by Handa et al. (2013) that children are now increasing the hours spent in school as reflected by reduced absenteeism (10 percentage points) and increased enrolment (7 percentage points). It is possible that these children who used to supply some of the household labour have reduced the time spent contributing to family labour on the farm.
- Again, Handa et al. (2013) find that farmers in smaller households relied on some hired male labour after the intervention but according to this study, this did not reduce the hours worked on the farm. Prior to the study, the use of herbicides was expected to matter to some extent, but this did not have a negative effect on household labour supply in agriculture.
- Subsequent targeting of transfers should be ‘carefully done’ to produce the anticipated results. This concern has been raised because the data currently being used were gathered in 2005 and are now obsolete. Once the Ghana Living Standards Survey 6 data become available, new poverty estimates should be applied so that any targeting mistakes generated by the use of old data are avoided. It is also recommended the continuation of the intervention as it has a broader positive outlook for the future with regard to its goals. Expansion should be based on the new data currently being gathered so as to provide the implementers with well-informed, better determinants, such as the recipients’ poverty status and the current eligibility of the households.
- The impact of these programmes depends on timely cash transfers payments that are made at regular intervals so as to smooth the household consumption patterns. They should not compound consumption difficulties or be paid in lump sums as has been done in the past. There was a drift from household hours worked in farming to paid employment outside the household but whether or not the shift in labour is growth-enhancing for the overall economy is an issue researchers should look into.
