Earned and unearned income: Experimental evidence in Malawi

Last registered on March 04, 2021

Pre-Trial

Trial Information

General Information

Title
Earned and unearned income: Experimental evidence in Malawi
RCT ID
AEARCTR-0007286
Initial registration date
March 03, 2021

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
March 04, 2021, 6:36 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Region

Primary Investigator

Affiliation
International Food Policy Research Institute

Other Primary Investigator(s)

PI Affiliation
Williams College

Additional Trial Information

Status
Completed
Start date
2015-08-01
End date
2018-01-01
Secondary IDs
Abstract
Though the differential impacts of earned and unearned income have long been of interest to economists and policymakers, the study of this question is often conflated by other differences between the income streams. We conduct a field experiment in Malawi in which we examine the differential short-term effect of earned and unearned income on the allocation of expenditures and labor supply, holding all other factors constant. All participants receive an equal size cash payment and make the same time investment; half are required to work, and half are not.
External Link(s)

Registration Citation

Citation
Ambler, Kate and Susan Godlonton. 2021. "Earned and unearned income: Experimental evidence in Malawi." AEA RCT Registry. March 04. https://doi.org/10.1257/rct.7286
Experimental Details

Interventions

Intervention(s)
The sample is developed from a list of names and cell phone numbers of people who had sent remittances to farming families participating in a large study on agricultural extension and cash transfers. Following the survey, all the remitters named by farmers will be contacted and asked to participate in a short phone survey. At the end of the survey, all of the remitters will be notified that they will be contacted in several months and invited to a meeting where they will guaranteed the opportunity to earn additional money. Those migrants who choose to attend will be randomized into two groups: those who must earn the money through a temporary job and those who are simply given the money. We expect to offer approximately 10,000 Malawi Kwacha (around 20 USD), which is slightly more than the average yearly remittance total of approximately 8,500 Kwacha in our baseline data.

The first objective of this intervention then will be to determine if the participants spend the money differently when it is earned vs unearned. This will be measured in two ways. First, because remittances are a main focus of the study, two-thirds of the migrants will be offered the opportunity on the spot to remit a portion of their earnings to their families in their home location. Second, expenditures will tracked through brief expenditure surveys conducted with the migrant by phone at weekly intervals for one month after the payments are made. Third, we will measure labor supply to study whether work activity is affected.

The second objective will be to understand how recipient economic conditions affect how migrants choose to spend the money that they receive. This will be achieved in two ways. First, we will use the variation in economic prospects already induced by the treatment in the on-going field experiment to measure whether migrants whose family members have received capital transfers are less likely to remit this additional income to their family in the village. In a second randomized intervention, we will also induce exogenous variation in the migrant’s knowledge about the family’s short-term economic prospects by randomly selecting some migrants to receive information about expected agricultural conditions in their home area. This information will come from the midline survey conducted by IPA and IFPRI. Migrants will be given information about agricultural production in their family member’s area relative to the whole sample. The information will not be specific to the family member so as not to breach confidentiality.
Intervention Start Date
2016-01-01
Intervention End Date
2016-03-30

Primary Outcomes

Primary Outcomes (end points)
Allocation of expenditures and labor supply (earned/unearned study)
Remittances sent (information study)
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Levels expenditures in different categories (earned/unearned study)
Time use in different categories (earned/unearned study)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Participants are contacted for a short phone survey to establish contact shortly following collection of their phone number. They will then be called back and invited to an event that is located relatively near to their home. Prior to the event, possible participants are randomized into treatment for two separate interventions:
1. Earned vs unearned income
2. Information treatment and remittances
At the event, those in the earned income group will perform a clerical task and complete a baseline survey over the course of the day. Those in the unearned income group will only complete the baseline survey. At the end of the day, each participant will be paid and offered the opportunity to remit a portion of their payment home to their family member. Those in the information treatment group will be given information regarding whether the economic performance of the farmer club of their family member in the previous season before making the decision whether to remit.
Following the event, all participants will be targeted with a weekly phone survey for one month that records information on expenditures, labor supply, and remittances.
Experimental Design Details
Randomization Method
Randomization was done on a computer over the full list of eligible participants prior to the project events.
Randomization Unit
Randomization was done on the individual level, stratified by event.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
400
Sample size: planned number of observations
400
Sample size (or number of clusters) by treatment arms
200
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
International Food Policy Research Institute IRB
IRB Approval Date
2015-06-15
IRB Approval Number
2015-24-MTID-C

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
March 30, 2016, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
March 30, 2016, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
352
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
352
Final Sample Size (or Number of Clusters) by Treatment Arms
174: Earned 178: Unearned 169: No information 183: Information
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials