Intervention (Hidden)
The Government of Rwanda, in its Second Economic Development and Poverty Reduction Strategy 2013-2018 (EDPRS 2), sets out ambitious targets for the reduction of poverty. Against this background, the current study seeks to identify and rigorously evaluate the cost-effectiveness of household grants relative to education and employability skills training as a tool to decrease poverty, improve child nutrition, and enhance the ability of underemployed youth to make a successful transition to a productive adulthood.
Against the backdrop of this program is a question now gaining currency internationally as a critical one: it may not be too surprising to show that an expensive, intensive project such as HD `works’ relative to a control group that receives nothing, but is it more cost-effective than taking the cost of the program and simply distributing that money to beneficiaries? Given many studies in many different contexts showing that household grants programs can be effective at reducing poverty, and given the low cost and simplicity of distributing household grants, there is increasing interest in establishing household grants as the `index fund’ of economic development. This is a research agenda that is respectful of the judgment and authority of poor households, assuming that they may know best what is the highest value use of money for their own households. This research agenda has particular relevance in the Rwandan context because the Government of Rwanda is itself moving heavily into the use of household grants as an anti-poverty tool (for example the Vision 2020 Umurenge Program, which recently received \$50m from the World Bank), meaning that the interest and capacity to implement this alternate intervention broadly already exists. This study is the second benchmarking activity being run by this team in Rwanda, the first being the benchmarking of the Gikuriro child malnutrition intervention being run by CRS.
Our study aims to bridge these knowledge gaps by conducting a carefully calibrated, four-armed randomized trial. In one arm, beneficiaries will receive the HD intervention as it is been designed by EDC and USAID/Rwanda. In a second arm, beneficiaries will receive household grants calibrated to have equal cost to the funder (meaning that the same amount of money is spent by the funder, and differences in overhead rates across interventions translate into differences in the monetary value of the benefits received by individuals on the ground. A smaller third arm will receive both HD and household grants. A control group (fourth arm) will receive no benefits during the term of the study, to allow both interventions to be evaluated in absolute as well as relative terms. By focusing on the a broad set of economic and health outcomes, this study will provide timely and policy-relevant information as to how under-employed youth can best be assisted in making the transition into a productive adulthood.
Using an individual-level randomization including youth from roughly 250 villages, we compare the HD program to cash transfers. The USAID Huguka Dukore Rwanda Youth Employment Project is a five-year project (2017-2021). HD will provide 40,000 vulnerable youth (women and men) with employability skills by scaling up successfully proven Akazi Kanoze interventions across 19 (of 30 total) districts countrywide, using a series of inclusive innovations that will invite more youth to participate in Rwanda’s historic transformation, particularly women, youth with disabilities and other vulnerable groups. Recognizing the diversity of youth backgrounds and goals, HD will offer multiple program pathways including: i) employment preparation; ii) individual and cooperative youth microenterprise start-up; iii) business development for existing microenterprises; and iv) continuation onto additional formal TVET training. Transfer amounts were randomized across four different amounts. A `combined' arm was offered both the HD intervention and GD transfers.
To permit a rigorous comparison of cost-effectiveness, we costed both programs in detail prior to, and after, the intervention period, following \cite{levin2001cost}. The ex ante costing exercise was used to identify the approximate total cost of the HD intervention, as well as the estimated overhead costs to GiveDirectly of providing household grants in this context. The ex-ante costing of HD arrived at a per-beneficiary cost of \$452.47. We then randomized transfer amounts at the individual level in the cash arm across four possible transfer amounts. These amounts were chosen to provide informative benefit/cost comparisons across two different margins: HD vs cash, and small versus large cash transfer amounts. Incorporating GiveDirectly's operating costs, the amount actually received by households that generates the same expected cost to USAID as HD is $410.19. The comparison between these two arms therefore provides a straightforward window on expected cost-equivalent impacts. Because we anticipate the exact numbers from the ex-post costing exercise will differ somewhat from the ex-ante exercise, we have randomized two bracketing cash transfer arms which transfer $317.31 and $503.04 to households. A fourth and substantially larger transfer arm transfers $750 to beneficiaries; this amount was chosen by GiveDirectly as maximizing their own cost-effectiveness given the returns to transfers and the fixed costs in providing cash transfers via mobile money. The inclusion of this arm provides a statistically high-powered way of examining how benefit/cost ratios shift as the transfer amount rises. Using the final, ex-post costing exercise, we will arrive at an exact cost per eligible household for both implementers, and use a linear regression adjustment across all four GD transfer amounts to analyze comparative impacts at exactly equivalent costs to the donor, USAID.