The Impact of Public Transfers on Household Resource Allocation: Evidence from a Supplementary School Feeding Program

Farzana Afridi, University of Michigan

Can public transfers improve the wellbeing of children or do they crowd out household resources and nullify the expected gains to the child? This paper draws upon a unique non experimental survey data to test the implication of the theory of altruism on intra household resource allocation by analyzing the impact of a school feeding program on a child’s daily nutrient intake in rural India. The results suggest that the school meal scheme raises nutrient consumption by a fraction of the transfer. To the extent that the nutrient intake of the child rises by less than the full amount of the transfer obtained from the school meal, the results provide evidence of reallocation of resources by the household to other members or goods. This result is robust to changes in specification of the empirical model which correct for possible endogeneity of program participation at the individual, school and community level.