The Vital Role of Cash Transfers: Lessons from the Largest Energy Subsidy Reform in the Developing World
51 Pages Posted: 27 Jun 2024
Date Written: September 15, 2024
Abstract
This paper examines the effect of cash transfers during the 2010 energy subsidy reforms in Iran, which provided monthly lump-sum payments to Iranian citizens, excluding non-Iranian residents. We show that the reform generates a 17% income gap and a 12% poverty rate gap between cash and non-cash recipients, leading to a nutrition gap and changes in parental behaviors affecting children. Health data reveal a growth gap for children exposed to the reform early in life, especially among low-income groups. Counterfactual analysis shows that without transfers, cash recipients would share similar poverty rates and income distributions with non-cash recipients.
Keywords: Energy subsidies reform, Poverty, Children's Health
JEL Classification: H23, H31, H51, I14, I15
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