Conditional Cash Transfers: Helping reduce poverty in the short- and long-term Ariel Fiszbein Chief Economist Human Development Network World Bank
CCT Programs have become very popular in the developing world and beyond Programs share some basic characteristics: 1. They transfer cash 2. They ask that households comply with a series of conditions (e.g. school enrollment and attendance, attendance at health centers for young children) 3. They are targeted to the poor Twin objective of CCT programs: 1. Reduce current consumption poverty 2. Promote accumulation of human capital
A family of program approaches Program size/target Nationwide Niche (regional or narrow target population) Small scale/pilot Conditions Education and Health Education Only Bolsa Familia (Brazil) Oportunidades (Mexico) Bono de Desarrollo Humano (Ecuador) Bolsa Escola (Brazil) Familias en Acción (Colombia) Jaring Pengamanan Sosial (Indonesia) Program of Advancement through Health and Education (Jamaica) Female Secondary School Assistance Program (Bangladesh) Japan Fund for Poverty Reduction Girls Scholarship Chile Solidario Program (Cambodia) Social Risk Management Project (Turkey) Education Sector Support Project (Cambodia) Programa de Asignación Familiar (Honduras) Cash Transfer for Orphans and Vulnerable Children (Kenya) Atención a Crisis (Nicaragua) Red de Protección Social (Nicaragua) Basic Education Development Project (Yemen) Subsidio Condicionado a la Asistencia Escolar - Bogota (Colombia) Punjab Education Sector Reform Program (Pakistan)
Motivation CCTs have often replaced a myriad of badly targeted, regressive, ineffective subsidies and piece-meal programs CCTs as a new contract between the state and CCT beneficiaries. Emphasis on co-responsibilities rather than conditions Large-scale CCTs have survived political transitions CCTs have shown positive results through credible impact evaluation studies
CCT impacts on consumption poverty Message 1: CCTs have generally led to substantial reductions in consumption poverty among beneficiaries in particular when transfers were large
CCT impacts on consumption poverty CCT impacts on consumption Median per capita consumption (US $) Average transfer (% of per capita consumption) Impact on per capita consumption (%) Impact: headcount index (% points) Impact: sqd. poverty gap (% points) Mexico (1999) Nicaragua (2002) Colombia (2006) Cambodia (2007) 0.66 0.52 1.19 0.75 20% 30% 13% 3% 8% 21% 10% -- 1.3** 5.3** 2.9** -- 3.4** 8.6** 2.2** --
CCT impacts on consumption poverty Message 2: Small offsetting adjustments: Modest, if any, reductions in adult labor market participation Substantial reductions in child work, Mexico: child labor fell by 2-5% points for girls-boys Cambodia: 14 fewer hours worked for pay No major impacts on remittances, fertility, or general equilibrium effects
CCT impacts on consumption poverty Message 3: Other behavioral changes associated with the transfer may also have positive effects on household welfare: Households may invest part of the transfer (Mexico) Changes in the composition of consumption in particular, increases in the consumption of more nutritious food (Mexico, Ecuador, Colombia, Nicaragua)
CCT impacts on education and health outcomes Message 1: CCTs have led to substantial increases in the utilization of education and health services in particular among the poor:
CCT impacts on education outcomes CCT impacts on enrollment Age range 8-13 14-17 6-15 Baseline enrollment 91.7% 63.2% 60.7% Impact (% points) 2.1** 5.6*** 7.5*** Size of transfer Colombia 17% Chile 3-7% Ecuador Mexico Nicaragua Cambodia Pakistan 6-17 Grade 0-5 Grade 6 Grade 7-9 7-13 Grade 7-9 10-14 75.2% 94.0% 45.0% 42.5% 72.0% 65.0% 29.0% 10.3*** 1.9 8.7*** 0.6 12.8*** 31.3*** 11.1*** 10% 20% 30% 2% 3%
CCT impacts on health outcomes CCT impacts on health center visits Age range Baseline level Impact (% points) Size of transfer Colombia 17% Chile Ecuador Honduras Mexico Nicaragua <24 months 24-48 months 0-6 years 3-7 years 0-3 years 0-3 years 0-3 n.a. n.a. 17.6% n.a. 44.0% 69.8% 55.4% 22.8** 33.2*** 2.4 2.7 20.2*** 8.4 13.1* 7% 10% 9% 20% 27%
CCT impacts on education and health outcomes Message 2: Program effects are concentrated among the poor Example: Nicaragua
CCT impacts on education and health outcomes Message 3: Increases in service utilization, do not automatically translate into improvements in final outcomes: Examples Child nutrition improved but not in all programs. Higher enrollment rate may not result in learning Positive changes in cognitive development for children of pre-school ages.which may require complementary interventions
Policy implications 1. Complementary actions are needed on the supply side: Improving access by: expanding supply of public services (e.g. Mexico), more use of private providers or NGOs (Central America) Improving the quality of the supply by: implementing pay-for-performance schemes for providers in parallel with the CCT (e.g. Bangladesh, Mexico)
Policy implications: Complementary interventions 2. Complementary interventions may also be needed on the demand side: Parenting interventions ( pláticas in PROGRESA, social workers in Chile Solidario) Early Childhood Development programs to provide a head-start can help addressing low learning outcomes later on
Policy implications 3. CCTs in the context of social protection policies CCTs cannot be the right instrument for all poor households CCTs better instrument for structural than transient poverty CCTs complement programs like workfare, unemployment insurance, social pensions
The institutional legacy of CCTs Led the way in the design of well-run administrative structures for beneficiary selection, payments, transparency Groundbreaking in terms of the importance given to impact evaluation Potential to contribute to improving the overall quality of public policies