Introduction
An initiative first established in Latin America during the late 1990s,
conditional cash transfer (CCT) programs had progressed to be one of the
key social programs in rural regions in and surrounding Mexico. Currently, it
has made its place as a popular social assistance program in over 20
developing countries (including most of Latin America) and some developed
countries. CCTs are those reforms that aim to reduce poverty and inequality
among poor and vulnerable groups via a direct transfer of monetary resources
to them. Their methods involving breaking inter-generational transfer of
disadvantages by providing incentives and investing in human capital
formation i.e., providing support to children by boosting their health and
education circumstances from an early age. Most of these programs use a
combination of geography and a means-testing identification method (used to
determine the eligibility of one for government welfare schemes) to target
households, in particular women and children, provide them with cash
transfers and empower the needy by associating them with public welfare
services. Brazil’s ‘Bolsa Escola’ is at present the largest CCT program in the
world that reaches out to about 14 million families, including young students.
Several debates have been conducted to actually discuss and derive possible
benefits of implementing a CCT program. Literature review and evaluations
from 2 models in Latin America have fairly buried that dispute on grounds that
CCTs are better than unconditional transfers for achieving objectives
economically and politically.
Progresa (Mexico)
The program ‘Progresa/Oportunidades’ initiated in 1997, the first of 2
successful CCT models provided cash payments to families across rural and
semi-rural Mexico. The focus was three-fold: (a) education; (b) health; (c)
nutrition with a feature to give money to mothers particularly because earlier
literature proved that to be crucial for overall child welfare. The parameters in
question and the conditions attached to each of them are as follows.
Education grants
• Given to children from third year of primary school to the end of
schooling.
• Grants increase as children moved to higher grades.
• At higher levels, an increased flow of money to girls relative to boys.
• Cash given to mothers initially and then to their children with time.
Conditions
• The children from the chosen households would have to attend school
regularly and maintain a minimum of 85% attendance.
• The same batch would not be allowed to repeat a grade twice thus
barring a fresh lot from gaining the benefits.
Health & Nutrition grants
• Cash transfers to families that required financial assistance to cover
health maintenance costs, like insurance.
• Provisions for nutritional supplements distribution targeted mainly
towards pregnant women, lactating mothers and young children (under
4 years of age).
Conditions
• All families would mandatorily have to engage in ‘preventative care’
workshops i.e., lessons on how to curb disease prevention amongst
the vulnerable rural population by learning about the symptoms,
diagnosis and causes of diseases and encouraging basic sanitation.
• Mothers have to attend monthly health and nutrition talks.
• Senior school children receiving grants would also be expected to
attend seminars on adolescent themes, sex education, for example.
Evidence of Impact: Most studies in Progresa would look at the differences in
outcomes between the treatment and control groups and separately outline
the short-term VS long-term effects. The impact of this CCT program is
measured along the following dimensions: (a) education and times use; (b)
health and nutrition; (c) household consumption, investment and savings; (d)
gender and demographic; (e) political and environmental.
(a) Education
• School enrolment increased and overall grade repetition went down.
• The number of students who successfully completed years of schooling
went up.
• The impact was greater for those who enrolled at a younger age and
thus had a longer exposure.
(b) Time use
• Study and analysis of random samples chosen from the total
population showed evidence of a decrease in child labor as a result of
the enrolment. Since the condition of the cash transfer required the
recipients to be in school, an income source from CCTs reduced the
need for income from child labor.
• Adult-labor supply did not see a fall comparatively, possibly because
they were required to compensate for the fall in hours worked by their
children to keep up the same income level.
(c) Health & nutrition
• Health care utilization increased along with a consequential decrease
in self-reported illnesses.
• The under-five mortality and disease frequency due to nutritional
deficiencies reduced.
(d) Consumption, investment and savings
• Overall household consumption, in terms of food intake, increased.
• Investment by the rural population in small, mass-friendly businesses
i.e., micro-entrepreneurship and self-employment arose.
(e) Gender
• A key focus in Progresa CCT program, maximum of the transfers were
provided to mothers and girls.
• Two important impacts on the voice of women as a result of these
benefits: improvement in the decision-making power of women within
the household and a fall in domestic violence.
(f) Demography: marriage and fertility
• Increased independence of women could potentially lead to reduced
number of marriages and increased divorces in a male dominated
society, however evidence spoke of increased incidences of the
contrary i.e., more number of marriages/cohabitation.
• Financial stability through cash transfers led to better incentives to
have children and raise a family.
• No changes in fertility of the mothers.
• Girls who grew up during the course of the program delayed marriage
and childbearing compared to earlier cases due to feasible choices of
establishing a job and career.
CCT Model, Columbia
The second most successful model in South America, the ‘Subsidios
Condicionados a la Asistencia Escolar’ (SCAE) CCT program was initiated in
2005 to investigate the impact of a cash transfer scheme in Columbia on the
medium and long-run educational outcomes across varying designs. Through
controlled randomized experiments, the program focused only on education in
secondary schools unlike the Progresa that looked at 2 additional dimensions
like health and nutrition. The groups observed in this model were students
from grades 6-11 in San Cristobal and Suba district of Bogota respectively.
San Cristobal district: ‘Basic/Savings’ Experiment
Outline of the experiment design: Eligible secondary school students from
grades 6-11 were divided into two groups, control and treatment. Two further
sub-branches of the treatment group were looked at, each receiving the
‘basic’ and ‘saving’ treatment respectively. These 2 sub-branches were
revenue-neutral but different in incentives. The control group received no
benefits.
- Basic Treatment involved a financial assistance of $30 to students
every two months on the condition that they would mandatorily enroll in
school and maintain an attendance of 80%.
- Savings Treatment involved a transfer of $20 to every student per 2
months with $10 in savings. The accumulated savings would be given
at the start of the next academic year. This was on the same condition
as the basic treatment.
Suba district: ‘Tertiary’ Experiment
Outline of the experiment design: Similar to the earlier case, the control group
in this experiment received zero benefits. However, the one and only
treatment group were subject to ‘tertiary’ action wherein $20 was given to
eligible students from grades 9-11 every two months. The condition remained
the same as previously. But additionally, a lump sum was offered to the
students on successful graduation and enrolment in tertiary education. Those
who chose not to enroll would still be recipients of this extensive amount but
with delay.
Outcomes of interest and findings
Among the many variables that can be observed and analyzed via this
experiment, 3 medium-term and 2 long-term outcomes are looked at. They
are the following.
(a) Medium-term: on-time enrolment in secondary school, taking the school
exit exam and on-time tertiary enrolment.
(b) Long-term: Extended tertiary enrolment and graduation.
The findings derived individually during both spans of time are as follows.
Medium-term
1. On-time enrolment in secondary school
• Overall a positive outcome. All treatments increased the probability of
enrolment with the highest number recorded in the ‘savings’ treatment
sub-group.
• The increase could potentially be attributed to reasons like less grade
repetitions, lower dropout rates and of course, the incentives in
question.
2. Taking the secondary school exit exam
• This outcome didn’t observe an effect overall. Conditional on
enrolment, none of the treatment sub-groups had a significant impact
on taking the exit examination relative to the control group.
3. On-time tertiary enrolment
• A well-margined increase in ‘good’ quality tertiary institutions following
the savings treatment was observed. However, with the tertiary
treatments only, enrolment increased but in ‘low’ quality schools. This
implied that removing savings constraints might be more important
rather than the incentives.
Long-term: Looking the effect of this CCT program 5-10 years post secondary
school graduation, no substantial effect is seen per se. It is true and validated
that the treatments meted out to all groups and sub-groups did accelerate
enrolment rates at the time with no-benefits receiving control groups slowly
catching up, long-term outcomes could not be determined in terms of these
parameters. If thought consequentially, more enrolment and more successful
completions would eventually lead to greater human capital formation and skill
development, a requirement for sustainable employment in the future.
Conclusion
There is not much doubt that conditional cash transfer programs are
administratively quite extensive and require constant monitoring at each
stage. Ample amount of time is invested in making sure that appropriate
information on the eligibility of households is gathered and screened by local
and union governments. To make sure that the recipients adhere to the
conditions, it is the responsibility of the state to look after the efficient working
of CCT programs. For non-compliance penalties are usually in place that
range from warnings to removal from financial benefits. But even with a 100
successful models built, the moot question still remains. Overall do CCT
programs carry more weight than unconditional ones for achieving objectives?
Studies suggest a favorable answer on economic and political grounds
explained as follows.
Political reasons: CCT programs satisfy people across the political spectrum
for the simple reason that there are ethics attached to the motivation behind it,
governments get into a better shape by carefully planning and executing what
could be one of many viable solutions to inequality and poverty and it is not
just a ‘cash handout’ scheme, the conditionality is contract-based. So the
ability and pathway to gather support from counterparts in governments is
better.
Economic reasons: What is deemed to be socially optimal investments,
private investments in human capital of children can be lower. Often parents
are misguided or they themselves undervalue the returns to such capital and
how it could mold the younger generation and prepare them for adult life. This
is one of the main economic reasons why externalities in investment, in this
case the CCT program from governments are the better choice. It’s not only
optimal for the children and parents alone, but for the society as a whole.
Contrary to all the pluses of a CCT, since it has been examined how big an
initiative this is in terms of planning and execution, there are costs that need
to be incurred. Additionally, if data is not drawn with accuracy about the
eligible households, there could be exclusion of those who need this scheme
the most i.e., an error in judgment. Finally, ethically, it does sound like a move
driven by empathy and willingness to advocate for the poor and vulnerable but
a clash of opinion comes to light when it is also pertinent that social protection
is a basic human right to which no conditions can and should be applied.
Therefore, there will remain a limited hesitancy while considering CCTs based
on its drawbacks but if literature and practical experiments were to be the
base on which the argument stands, governments must consider conditional
cash transfer programs.
References
Barrera-Osorio, F., Linden, L.L., & Saavedra, J.E. (2019). Medium and Long
Term Educational Consequences of Alternative Conditional Cash Transfer
Designs: Experimental Evidence from Columbia. American Economic Journal
of Applied Economics.https://www.nber.org/system/files/working_papers/w23275/w23275.pdf
Parker, S.W., (2017). Conditional Cash Transfers: The Case of
Progresa/Oportunidades. Journal of Economic Literature.
working_papers
Gertler, P. (2004). Do conditional cash transfers improve child health?
Evidence from PROGRESA’s control randomized experiment. American
Economic Review.
Comentários