The Macroeconomic Impact of Cash Transfer Programs on Poverty Alleviation in Developing Countries

Abstract

This study explores the macroeconomic impact of Cash Transfer Programs (CTPs) on poverty alleviation in developing countries through a systematic literature review. It investigates how CTPs, beyond addressing immediate household needs, influence broader economic indicators such as consumption, employment, local economic activity, and long-term development. Drawing on recent empirical studies, the review finds that well-targeted CTPs contribute to poverty reduction, enhance social equity, and generate positive spillovers in local economies. Contrary to common concerns, the evidence shows limited adverse effects on labor supply and inflation, while highlighting the importance of program design, fiscal sustainability, and institutional capacity. The discussion emphasizes that CTPs function not only as welfare tools but also as instruments for inclusive growth, particularly when integrated with complementary services and development policies. The findings offer policy-relevant insights for governments aiming to build more resilient and equitable economies through effective social protection systems.