Dependency traps in self-targeting food aid programs

What is it about?

Our paper highlights an important trade-off faced when providing aid in the particular case of food-for-work programs. On the one hand, aid must be abundant so that beneficiaries can accumulate capital in order to achieve long-run sustainability. On the other hand, the abundance of aid may create the wrong incentives on beneficiaries, if they perceive that the benefits are open-ended and anchored on the reservation wages of high-productivity individuals. The trade-off can be solved, allowing abundant but transitory aid, if food-for-work programs provide access to technologies that allow beneficiaries to catch up with the high-productivity individuals.

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Why is it important?

Our paper is important because food-for-work programs are widely used in developing countries to provide food aid. Our paper may help explain why these programs have shown mixed results with regards to the public-works projects they create. The mixed results occur when the public goods produced only provide access to technologies with piecemeal improvements in productivity, insufficient for beneficiaries to catch up with high-productivity individuals.