Do Cash Transfers Improve Birth Outcomes? Evidence from Matched Vital Statistics, Program and Social Security Data

Abstract

There is limited empirical evidence on whether cash social assistance to poor pregnant women improves children’s birth outcomes. Using program administrative micro-data matched to longitudinal vital statistics on the universe of births in Uruguay, we estimate that participation in a generous cash transfer program led to a sizeable 15 to 17% reduction in the incidence of low birth weight. Improvements in mother nutrition and a fall in labor supply, out-of-wedlock births and mother’s smoking all appear to contribute to this effect. Effects are not driven by changes in fertility. We conclude that, by improving child health, cash transfers may help break the cycle of intergenerational poverty.