  Precipitated by rapid globalization, rising inequality, population growth,
and longevity gains, social protection programs have been on the rise in low-
and middle-income countries (LMICs) in the last three decades. However, the
introduction of public benefits could displace informal mechanisms for
risk-protection, which are especially prevalent in LMICs. If the displacement
of private transfers is considerably large, the expansion of social protection
programs could even lead to social welfare loss. In this paper, we critically
survey the recent empirical literature on crowd-out effects in response to
public policies, specifically in the context of LMICs. We review and synthesize
patterns from the behavioral response to various types of social protection
programs. Furthermore, we specifically examine for heterogeneous treatment
effects by important socioeconomic characteristics. We conclude by drawing on
lessons from our synthesis of studies. If poverty reduction objectives are
considered, along with careful program targeting that accounts for potential
crowd-out effects, there may well be a net social gain.
