Rates of Return of Social Protection in Cambodia

poor and rural households (e.g. lower returns associated with agriculture and informal activities).

Education (school attendance) Household consumption is positively related to school attendance in Cambodia. The analysis includes all individuals between 6 and 25 years old if they have not completed upper secondary education (primary education includes grades 1 to 6, lower secondary education 7 to 9, and upper secondary education 10 to 12). At the national level a 10% increase in the level of consumption is related with a 0.2 percentage point higher probability of attending school. This effect is substantially higher for rural areas and poor households. A 10% increase in household consumption per capita (i.e. USD 3.4 per month for a median poor rural household) is associated with a 2.0 and 2.7 percentage point higher probability for individuals aged 6 to 25 year to attend school in a poor and a poor rural household respectively.

Further analysis by education level shows that in the case of poor rural individuals the effect is higher for lower secondary than for primary education, with a 10% increase in consumption level associated respectively with a 5.6 and 2.2 percentage point higher probability of attending school, while it is not significant for upper secondary education. For non-poor households (urban and rural) a possible effect is only measured for secondary education, while there are no significant effects for poor urban households.

Results suggest that, by increasing household disposable income, social transfers are likely to affect educational investments, and in turn generate positive effects on human development.

In the case of poor rural households, social transfers may have a stronger effect on lower secondary school attendance than at the primary level. However, there is no significant effect for upper secondary education which may be explained by low expectations of future returns (this can also explain the lack of a significant effect for poor urban individuals). In this sense, complementary policies to increase education quality and to enhance future labour opportunities are necessary to create incentives for school attendance, promote human development and increase the returns to social protection investments.

Nutrition Child malnutrition remains one of the main developmental challenges in Cambodia. It is at the same time a direct cause and effect of poverty. Improving child nutrition has a direct effect on reducing child mortality and improving future economic returns. At the national level, on average, a 10% increase in household consumption per capita is related to a 0.4 percentage point lower probability of children being underweight. However, the link between household consumption and underweight status is not significant for poor households. This suggests that other factors are more relevant in explaining the potential causes of malnutrition in Cambodia.

In poor households, having a proper toilet facility (as a proxy for sanitation conditions) is associated with a 6 to 8 percentage point lower probability of children being underweight. A higher level of education (estimated by the maximum level in the household) is also related to 7