Can cash aid harm non-recipients by raising local prices? We show that a householdtargeted cash transfer in the Philippines increases the prices of perishable foods in some markets and raises stunting among non-beneficiary children by 11 percentage points (34 percent). Impacts increase in the size of the village income shock and remoteness-- and are sustained 2.5 years after program introduction. Price effects from an experimental sample are confirmed with national expenditure surveys collected during program scaleup. Household-targeted cash transfers can thus generate local spillovers that undermine program goals. Selected geographic targeting may avoid price spillovers at moderate additional cost.
Health and income are strongly correlated both within and across countries, yet the extent to which improvements in income have a causal effect on health status remains controversial. We investigate whether short-term fluctuations in aggregate income affect infant mortality using an unusually large data set of 1.7 million births in 59 developing countries. We show a large, negative association between per capita GDP and infant mortality. Female infant mortality is more sensitive than male infant mortality to negative economic shocks, suggesting that policies that protect the health status of female infants may be especially important during economic downturns.