Socioeconomic impact of cash transfers by local governments

Abstract

As the government's role expanded during the pandemic, social security services have widened rapidly not only by the central government but also by the local governments. In particular, the experience of unconditional cash transfers in response to COVID-19 was an opportunity for the local governments to draw attention as a supplementary role to the central government’s basic social security in the era of decentralization. In other words, the welfare programs of local governments are increasing as there is a limit what the central government alone can do in resolving the blind spots under the economical impact. However, there are many cases of regional programs where the beneficiaries or the purpose of the projects are similar to those of the central government’s. This study investigates whether such regional welfare programs were effective for the resident’s well-being. We examine the impacts of direct cash transfers by the local governments on residents’ health and income-related health inequalities, employment, and perceptions of welfare. As a result, at least, it seems that the local governments’ expenditures for complementary benefits for the national program had a significant effect on improving the residents’ health and reducing inequalities. On the other hand, there was no effect on health improving in the case of overlapped or duplicated programs among the governments, and unconditional cash transfers including COVID-19 stimulus payments. The unconditional cash benefits had a positive effect on social solidarity and trust in the local governments, which, however, did not lead to get support for universal welfare. In building the welfare state of our own, it is necessary to establish a desirable role of the local governmentsasthe problem is not confined to the financial structures. And it is meaningful as a realistic alternative to strictly check the effectiveness of the regional programs to induce improvement of efficiency of their expenditures.