TY - JOUR

T1 - Decoupled but Not Neutral

T2 - The Effects of Counter-Cyclical Cash Transfers on Investment and Incomes in Rural Thailand†

AU - Wagener, Andreas

AU - Zenker, Juliane

N1 - Funding Information: For the empirical analysis, we use an extensive panel data set representative for rural households in the relatively poor Northeast of Thailand. The data provide detailed information on all household members, composition of income, financial situation, agricultural production, assets, agricultural shocks, and anticipated risks. The surveys were carried out in the project “Impact of shocks on the vulnerability to poverty – consequences for the development of emerging Southeast Asian economies,” sponsored by the German Research Foundation (DFG FOR 756) and continued now as the Thailand Vietnam Socio‐Economic Panel (TVSEP). The full questionnaire is available at https://www.tvsep.de/ 13

PY - 2021/9/7

Y1 - 2021/9/7

N2 - In 2009, the Thai government implemented a price insurance scheme for rice, cassava, and maize farmers. The program, which was abandoned after only two years, added to the incomes of registered farmers a non-negative but stochastic amount that was decoupled from farmers' agricultural activities. We apply a simple machine learning algorithm based on rich panel data to control for self-selection into the program and study its impact on small-scale rice farmers in relatively poor Northeastern Thailand. Program participation increases rice production but also leads to shifts in investment behavior and the composition of income generating activities away from agriculture, which may be beneficial for rural development. Moreover, farmers who are initially less poor experience a substantial increase in overall income. Decreasing risk-aversion and relieved credit constraints may be possible channels for these effects.

AB - In 2009, the Thai government implemented a price insurance scheme for rice, cassava, and maize farmers. The program, which was abandoned after only two years, added to the incomes of registered farmers a non-negative but stochastic amount that was decoupled from farmers' agricultural activities. We apply a simple machine learning algorithm based on rich panel data to control for self-selection into the program and study its impact on small-scale rice farmers in relatively poor Northeastern Thailand. Program participation increases rice production but also leads to shifts in investment behavior and the composition of income generating activities away from agriculture, which may be beneficial for rural development. Moreover, farmers who are initially less poor experience a substantial increase in overall income. Decreasing risk-aversion and relieved credit constraints may be possible channels for these effects.

KW - Agricultural subsidies

KW - cash transfers

KW - counter-cyclical payments

KW - D13

KW - decoupling

KW - farm households

KW - H25

KW - I38

KW - machine learning

KW - propensity score matching

KW - Q12

KW - rural development

KW - Thailand

UR - http://www.scopus.com/inward/record.url?scp=85096684119&partnerID=8YFLogxK

U2 - 10.1111/ajae.12172

DO - 10.1111/ajae.12172

M3 - Article

AN - SCOPUS:85096684119

VL - 103

SP - 1637

EP - 1660

JO - American Journal of Agricultural Economics

JF - American Journal of Agricultural Economics

SN - 0002-9092

IS - 5

ER -