Synopsis: Ethiopia’s social protection program is associated with improved household resilience

Abstract

We examine the implication of the Productive Safety Nets Program (PSNP) in Ethiopia on the economic resilience of rural households. Using five-rounds of household panel data covering nine years, we implement a recently developed probabilistic moment-based approach to measure resilience and evaluate the role of PSNP transfers and duration of participation in PSNP on household resilience. We document three important findings. First, although PSNP transfers are positively strongly associated with resilience, we find that transfers below the median are less likely to generate meaningful improvements in resilience. Second, continuous participation in PSNP is associated with higher resilience. Third, our evaluation of both short-term welfare outcomes and longer-term resilience suggests that these outcomes are likely to be driven by different factors. These findings suggest boosting household resilience will require significant investments in social protection programs and continuous participation in these programs. Our findings have important implications for the design and targeting of social protection programs in Africa, where safety nets programs generally operate at small scale with small transfers to beneficiaries over relatively short durations.