Human capital returns to cash transfers in Uganda: does it matter in the long run?

The paper reports on an ex-ante evaluation of the nationwide scale up of
two pilot cash transfer programmes in Uganda. We use panel data to
estimate consumption elasticities of child health status and school enrolment.
They provide the main parameters of a micro-simulation model
predicting cash transfer effects on human capital accumulation and feedback
effects on consumption. Quantifying year on year costs and direct
and indirect benefits, we track the annual trend in rates of return. The
findings indicate important gains in child health, schooling, and income
growth associated with programme participation. The rates of return
improve over the medium term but remain negative after 10 years.
These findings underline the need to regard cash transfers as longerterm
social investment instead of short-term costs.