Public Transfers and Participation Decisions in Botswana's Subsistence Economy

Abstract Botswana has an extensive set of publicly provided cash and in‐kind food transfers geared at providing a safety net to poor and vulnerable groups. While such programs have improved household welfare, from a theoretical perspective they could have also created work disincentives or welfare dependency among recipient families. This article tackles this issue by modeling the impact of publicly provided cash and in‐kind food transfers on farmer participation decisions in the subsistence crop economy in Botswana, using a probit regression and agricultural census data for 2004. Results show that social pensions have had no impact on farmer participation decisions, most likely because they are too small to influence household behavior. However, government food rations ( GFR s) have reduced the probability of farmer participation in subsistence crop production, and, hence, have created work disincentive among recipient subsistence families. Specifically, recipient families of GFR s are 8.1 percentage points less likely to participate in crop production than non‐recipient households.