Social safety nets and productivity outcomes: Evidence and implications for Bangladeshi rice growers

• Published date: 01 September 2023
• Author: Md Abdus Salam,Asif Reza Anik
• Date: 01 September 2023
• DOI: http://doi.org/10.1111/asej.12310

ORIGINAL ARTICLE

Social safety nets and productivity outcomes: Evidence

and implications for Bangladeshi rice growers

Md Abdus Salam|Asif Reza Anik

Department of Agricultural Economics, Bangabandhu Sheikh Mujibur Rahman Agricultural University

(BSMRAU), Gazipur, Bangladesh

Correspondence

Md Abdus Salam, Department of Agricultural Economics, Bangabandhu Sheikh Mujibur Rahman Agricultural

University (BSMRAU), Gazipur, Bangladesh.

Email: salamecon@bsmrau.edu.bd

Abstract

Using national representative cross-sectional data from 8846 rice growing plots in

Bangladesh, we analyze the impact of social safety net programs (SSNPs) on rice farmers’

productivity and efficiency. This study applied the propensity score matching (PSM)

approach to correct the possible self-selection biases arising from observed and

unobserved factors affecting a household’s SSNP participation decisions. The stochastic

frontier production function is estimated separately for participants and non-participants

to compare yield and technical efficiency. Our results show that the output elasticities of

all inputs except land and fertilizer are significantly higher for non-participants than par-

ticipants. The SSNP participants are estimated to have 1.95% higher technical efficiency

than the non-participants, while their frontier yield is 11.75% higher. The average treat-

ment effect on treated (ATET) also confirms the yield and efficiency-enhancing role of

SSNPs, particularly in climate-stressed areas. The study argues for widening the SSNP

coverage to increase the marginal farmers’efficiency in climate-vulnerable areas. Other

policy interventions include policies to increase farmers’access to land through the

proper functioning land market, education, providing literacy training, and different pro-

duction inputs.

KEYWORDS

Bangladesh, propensity score matching, rice production, selection bias, social safety net, technical

efficiency

JEL CLASSIFICATION

O12, Q12, Q16

DOI: 10.1111/asej.12310

© 2023 East Asian Economic Association and John Wiley & Sons Australia, Ltd.

Received: 25 May 2022; Accepted: 11 September 2023

Asian Econ. J. 2023;37:401–428. wileyonlinelibrary.com/journal/asej 401

1|INTRODUCTION

Social safety net programs (SSNPs) are public-funded transfer programs for the

poor and disadvantaged communities so that they can continue a minimum stan-

dard of living, overcome adverse shocks on income and livelihood, escape the for-

mation of long-term poverty traps, and so forth (Hoddinott et al., 2012). From

2010 to 2016, around 36% of the global poor escaped extreme poverty with the help

of SSNPs and related support programs (Ivaschenko et al., 2018). Though there are

controversies about the economic and political sustainability of SSNPs, particularly

in resource-poor economies, many developing countries firmly believe in the pov-

erty reduction role of SSNPs and allocate a significant portion of the national bud-

get for different SSNPs. In developing and transition countries, such programs

benefit around 2.5 billion people, but around 80% of the poorest in low-income

countries are outside the coverage (Ivaschenko et al., 2018). During the designing

process, there might be ambiguity among policymakers about the anti-poverty

effects of different SSNPs, though Devereux (2002) observed the majority to signifi-

cantly contribute to reducing poverty. Many researchers have confirmed the multi-

dimensional effects of SSNPs. For example, research has explored the positive

effects of SSNPs on food security and income and poverty (Pradhan et al., 2013).

The literature exploring the impacts of SSNPs on agriculture reports mixed

results. For instance, SSNPs may help a farmer invest more and accumulate more

farm assets, which can help expand productioncapacity and attain higher produc-

tivity (Hoddinott et al., 2012). Alternatively, some public programs mayreduce

on-farm labor availability. Moreover, there is a risk for central production oppor-

tunities in the future that such programs may discourage private investments. In

extreme cases, farmers considering SSNPs an alternative livelihood option may

feel reluctant about farming. Tirivayi et al. (2016) identified three potential path-

ways through which social protection may affect agriculture. First, cash transfer

programs can increase savings or reduce a household’s credit constraints. Second,

SSNPs can reduce risk and uncertaintyrelated to weather vulnerabilities by acting

as insurance by providing irrigation and weather-based crop insurance schemes.

Third, programs focusing on employment, training, and skill development may

help a household access technology, knowledge, and different productive inputs.

The resulting outcome of SSNPs at the farm level may be on both farm pro-

ductivity and efficiency (the possible pathways are described in detail in

Section 2.1). Though some literature explored the effects on production and pro-

ductivity (e.g., Hoddinott et al., 2012), the effect on farm efficiency is yet to be

explored in literature, a pathway likely to be applicable for many SSNPs includ-

ing that do not directly focus on agriculture. Moreover, since SSNPs are

targeted at particular communities, there might be structural differences in

farms operated by SSNP participants and non-participants. Comparing

yield and productivity differences between the two groups without constructing

a proper counterfactual is inappropriate since there might be selection bias.

402 SALAM and ANIK