Sustaining the Gains of the Conditional Cash Transfer Program

In the Philippines, 12-13 January 2016

Asian Development Bank Headquarters

___________________________________________________________________________________
The Impact of the Pantawid Pamilyang Pilipino Programa on the Local
Economy: A Three-Staged Case Analysis1
WHAT IS PANTAWID
1.
The Pantawid Pamilyang Pilipino Program (herein referred in this paper as the
Pantawid Program or Pantawid) is a flagship social protection cum poverty alleviation
measure of the Aquino administration. Patterned after conditional cash transfers
developed and implemented in countries like Brazil and Mexico, the program provides
cash grants to the extremely poor and most vulnerable households on the condition that
they keep their children of ages 0 to 18 years healthy and attend school regularly while
pregnant women avail of maternal health services.
2.
Pantawid plays two pivotal roles in the governments development agenda: First
the conditionalities attached to the cash grants enable the poor and vulnerable
households in society to build and invest on the human capital resources of their children
and the youth; these would be an effective means of breaking the inter-generational
cycle of poverty at household and national level. And second, enabling the Pantawid
programs beneficiaries with stable and reliable financial support secures a safety net for
the poor, preventing them from sliding further to a more impoverished state. The
Pantawid has also been instrumental in helping the country fulfill its commitments under
the United Nations Millennium Development Goals of eradicating poverty and hunger,
achieving universal primary education, promoting gender equality, reducing child
mortality and improving maternal health care.
3.
The Department of Social Welfare and Development (DSWD) is the lead agency
that oversees the implementation of the Pantawid Program. Initially pilot scaled in
February 2007 with 6,000 poor household beneficiaries from selected 4 municipalities
and 2 cities, the program has been implemented nationwide to cover all provinces.
4.
Beneficiaries of the program were selected applying a two-stage process: first,
through a geographic targeting that identifies the poorest municipalities on the basis of
the poverty incidence which applied the official provincial poverty threshold, and second
through the proxy means test (PMT) method.
WHY THIS STUDY
5.
Close monitoring of the Pantawids progress in achieving the positive outcomes
of healthy and educated children for the ultra-poor households is continually being
undertaken since the programs nationwide implementation in 2008. To date, two
comprehensive evaluation assessments have been conducted; both impact studies
1

The Synopsis Report was written by Lourdes S. Adriano (team leader and expert on sectoral impact
assessment), Prudencio Gordoncillo (impact assessment at household), Merlyne Paunlagui (expert on
qualitative analysis and gender), and Karlo Adriano (expert on local economy wide impact assessment). The
study commenced last December 2015, and will be completed by May 2016.

Sustaining the Gains of the Conditional Cash Transfer Program

In the Philippines, 12-13 January 2016
Asian Development Bank Headquarters

___________________________________________________________________________________
showed that the Pantawid program has been successfully effective in attaining the
education and health outcomes.
6.
However, little attention has been accorded to evaluating the economic impact of
the program. While the completed impact studies alluded to potential economic effects of
the program, these have not been thoroughly examined. Similarly, there is also paucity
in the literature worldwide on the assessments of potential local economy impacts of
conditional cash transfers.
7.
This research study is an initial attempt to analyze the Pantawid program from
the purview of its economic contribution to the local economy. There is justification for
conjecturing that a social measure like Pantawid may have impact on the local economy.
First, the financial infusion of the government to this program has been meteoric.
Pantawids budget in 2015 was PhP62.3B, a six-fold increase from its 2008 budget when
the program was up-scaled nationwide. The program is more than half of the
Department of Social Welfare and Development (DSWD) budget in 2015, and more than
a fifth of the combined budget of the DSWD and the Departments of Health and
Education. Pantawids share to the total government coffers was 2.4% in 2015; in 2008,
its share was less than 0.1%. Second, the injection of Pantawid funds in the poorest
municipalities of impoverished provinces can be substantial to influence the local
economic performance. For example, Bicol region, which have a huge share of the
extremely poor families, got the biggest share of Pantawid budget in 2014, at P5.4 B.
This is about a quarter of the IRA budget for the region in that year. And third, the
beneficiary coverage is large: in 2014, the number of Pantawid recipients was 4.5 million
families, which is more than 130% from the beneficiary coverage in 2008. In 2009, the
number of eligible poor families stood at 5.2 million.
THE RESEARCH
8.
The overall objective of this project is to determine qualitatively and quantitatively
the nature, form, and degree of the economic impact of the Pantawids cash grant to the
local economy. The overriding thesis of the proposed research is that the provision of
regular and predictable cash grants to the extremely poor households in the context of
malfunctioning or nonexistent markets can generate positive productive and economic
impacts at the household level. In turn, this stimulates the local economy through
improved food value chains and more integrated economic networks that link Pantawid
beneficiaries to business groups, markets, and government and nongovernment
stakeholders. These would translate to macroeconomic impacts on poverty, inflation, job
creation, and local businesses generated.
9.
The nature and extent of economic impacts of Pantawid are manifested through
three inter-related sub-economies that comprise the local economy. In this study, the 3
sub-economies are the: household economy, economic sector (e.g., food sector), and
regional economy:

Household economy involves the accumulation, consumption and distribution

of resources within the Pantawid household beneficiary. The thesis is that
increased and varied consumption of Pantawid recipients serve as the
stimulus for spurring economic activities.

Sustaining the Gains of the Conditional Cash Transfer Program

In the Philippines, 12-13 January 2016
Asian Development Bank Headquarters

___________________________________________________________________________________

Economic sector refers to the commodity or service sectors whose production

has been stimulated by the increased demand from Pantawid beneficiaries.
In previous studies, Pantawid beneficiaries have apparently increased their
demand for food (particularly food staples or carbohydrate-rich food),
education-related goods, and clothing. Understanding on how Pantawidinduced demand for these goods has changed the structure, organization,
and performance of these economic sectors will be important in examining
the influence of this demand push on stimulating more integrated and wellfunctioning markets.

A subset of the economic sector level analysis will be a case study of one
particular market channel, and that is the flea market that sprouts during the
payout distribution. Whether or not these are merely unorganized petty
trading activities or these have evolved into participation of more formal
businesses will be the subject of this case study analysis.

Regional economy defines the spatial coverage constituting the local

economy of this research study. Local economy impact at this level refers to
the direct and indirect economic effects arising from the Pantawid
beneficiaries use of the cash grant. These could be in terms of impact on
price and inflation, unemployment, entrepreneurial activities, and poverty.
Variations of impact may also be due to another locational characteristic, i.e.,
rural versus urban. The analysis of local economy impact at this level will
focus on regional level effects using panel data (APIS, PSA-relevant survey
data of 2004, 2007, 2008, 2010, 2011, 2013, 2014, and DSWD Pantawid
related data).

10.
Project site areas for the household and sector analysis will be 3 provinces from
Bicol region: Albay, Camarines Norte, and the island-economy of Masbate.
COMPONENTS OF THE STUDY- WHERE WE ARE:
11.
The household level analyses will involve a repeat survey of the Pantawid
Program impact study (Wave 2 or the second nationwide Pantawid household survey
organized by DSWD and World Bank) that was done in 2014 but will focus on
consumption and income. Due to logistical and time constraints, the study will examine
Pantawid beneficiaries in the provinces of Albay, Camarines Norte, and Masbate. The
estimation of the impact of the CCT Program to the local economy at the household level
will replicate the RDD design done of the 2014 Wave 2 study. To enhance the
parameter estimates, the RDD procedure will be adjusted using propensity scores. The
current study, with the benefit of the Wave 2 study as the baseline, will expand the
analyses by not only comparing the economic behavior of Beneficiaries at a given time
period but also to do a temporal comparison. The current study will employ a double
difference analyses: the treatment-control difference in economic behavior and the
difference in economic behavior of the same respondents between the two survey
periods. The quantitative research will be enriched by qualitative research as the current
study will track the original respondents of the Wave 2 evaluation. The qualitative

Sustaining the Gains of the Conditional Cash Transfer Program

In the Philippines, 12-13 January 2016
Asian Development Bank Headquarters

___________________________________________________________________________________
analyses will also be employed to discern patterns in terms of the status of the Wave 2
respondents. For instance, we can look at the reasons for attrition and examine the
changing role of women in the Pantawid households.
12.
For the economic sector analysis of the local economy impact, Figure 2
illustrates the key economic segments or nodes of the value chains for the rice
commodity. The demand-driven push from Pantawid beneficiaries will stimulate
production of the goods demanded by Pantawid beneficiaries, specifically the 3 three
segments of the rice value chain: upstream (production); midstream comprising of the
processing, logistics, and marketing; and the downstream segment. The analysis will
trace and map the value chain segments for rice, and the potential changes in the
organization, structure, and performance of the value chain segments due to the
demand push from the Pantawid consumers in the 3 provinces of the Bicol region.
Qualitative methods employing focus group discussions and interviews of key informants
and actors in the value chain segments will be done to understand the nature and depth
of changes in the value chain, especially if these respond to the needs and requirements
of Pantawid poor families, introduce efficiencies in the value chain segments, and the
distributive effects on costs and benefits among the key players in the value chain. It wil
be supplemented with a market demand and supply analysis of the local rice economy.
13.
Part of the analysis will be a case study of the temporary markets that sprout and
operate in the surrounding areas where the Pantawid payouts are being distributed. The
types and varieties of trading and other market activities that occur during payout days
will be documented to find out who engages in these activities; to see if these have
evolved into productive and economic activities that respond to the needs of Pantawid
recipients or are these essentially informal trading activities; to assess the share of
expenses of Pantawid recipients and the nature of market relations that have developed.
14.
The local economy wide analysis will use time series data of the FIES, APIS, CPI
business surveys, and the recent Listahan-generated data. A regression approach will
be applied to examine the effects of Pantawid funds on local prices of key commodities
(food (e.g., rice) and non-food) that mainly constitute the Pantawid recipients basket of
expenditures, expansion (or contraction or no effect on) of business activities in the
locality (proxy by business permits), poverty gap related indicators (distinctions between
chronic and transient poor; disaggregated by rural and urban/various work occupations).

15.
The research study will conclude with the policy and institutional
recommendations. Further, short training and hands-on experience during the conduct of
the research will be provided to interested technical staff of DSWD to ensure that
transfer of technical skills and knowledge ensuing from the research approach and other
major lessons learned from the conduct of the study.
FOR THIS CONFERENCE, WE PRESENT THE INITIAL FINDINGS OF THE:
A.

Meso level view: THE FLEA MARKET CASE STUDY (Milagros, Masbate)
This is the first and most visible economic manifestation of a potential
economic stimulus of the Pantawid. It is a Pantawid-push retail trade

Sustaining the Gains of the Conditional Cash Transfer Program

In the Philippines, 12-13 January 2016
Asian Development Bank Headquarters

___________________________________________________________________________________

B.

economic activity that is regularly established at the vicinity proximate to the

payout area.
Using a mix of secondary and primary data, e.g, collected from Key Informant
Interviews and Focus Group Discussions, the case study will initially report on
who sells, what goods are sold, which goods are most and least bought by
the 4Ps beneficiaries, infrastructure and clustering of stalls during payout
days, buying practices of 4Ps, and the effect of the Pantawid on engaging
4Ps and non-4Ps beneficiaries to participate during payout days, gross sales,
and employment generation. The case study will also report on the market
collection fees during payout days and how it is being utilized.
The presentation will end by presenting the next activities to have an in depth
analysis of the impact of 4Ps on the local economy.
Macro level view: PANTAWID AND POVERTY
Using panel data from APIS, PSA, different surveys and DSWD, the team will
report the initial regressions of the effect of CCT to the lowest 30% income
decile (operational definition of the extremely poo). In particular, the team will
discuss the significance of a change in the CCT budget or expenditure to the
share of the lowest 30% income decile.
The presentation will end by discussing the next models that will be
formulated to be able to infer the effects of CCT to other key macro variables.