How conditional and unconditional cash transfers affect rural household economic resilience: Evidence from the China Household Finance Survey

Abstract

Cash transfers, as a fundamental form of social assistance, provide timely support to disadvantaged rural households and strengthen economic resilience among disadvantaged rural households. Strengthening economic resilience is crucial for poverty alleviation and enhancing rural households’ capacity to withstand economic risks. Few studies have systematically analyzed how different types of cash transfers influence rural household economic resilience, particularly within the context of China’s ongoing rural development and poverty reduction efforts. This research drew on data from the CHFS2019 to investigate the impact of both conditional and unconditional cash transfers on the economic resilience of rural households. Benchmark regression results present that conditional cash transfers significantly enhance household economic resilience in rural areas of China, while unconditional cash transfers have a significant inhibitory effect, with the stronger effect being less resonant than the latter. Heterogeneity analysis suggests that the influence of both conditional and unconditional cash transfers on household economic resilience is concentrated primarily in western regions. The mechanism analysis demonstrates that cash transfers can strengthen household economic resilience through two primary channels: Fostering human capital accumulation and elevating households’ long-term economic expectations. However, these positive effects are partially offset by a reduction in labor supply incentives, indicative of welfare dependency, a phenomenon empirically documented in prior studies on social assistance programs. This study highlights the significance of cash transfers in strengthening rural households’ economic resilience and offers key policy insights for sustaining poverty alleviation efforts and advancing common prosperity.

Keywords

Cash transfers / rural households / resilience / human capital / common prosperity

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