Ariel Fiszbein

Chief EconomistHuman Development

World Bank

Motivation

Many developing countries around the world have conditional cash transfer (CCT) programs in place

CCTs have shown positive results through credible impact evaluation studies –source of their popularity

Focus on household behavior: relevant for social policies in developed countries as well

Policy Research Report summarizes lessons of experience

Outline

1. Present findings of report

2. Discuss implications for social policy

The CCT revolution

The CCT Revolution

Motivation

Programs vary, but all share some basic characteristics:

1. They transfer cash

2. They ask that households comply with a series of conditions—generally, school enrollment and attendance, often also attendance at health centers for young children

3. They are targeted to the poor

“Twin objective” promise of programs:1. Reduce current consumption poverty

2. Promote accumulation of human capital

A family of program approaches

Conditions Education and Health Education Only

Bolsa Familia (Brazil)

Oportunidades (Mexico)

Bono de Desarrollo Humano (Ecuador) Bolsa Escola (Brazil)

Familias en Acción (Colombia) Nationwide

Program of Advancement through Health and Education (Jamaica)

Jaring Pengamanan Sosial (Indonesia)

Female Secondary School Assistance Program (Bangladesh)

Chile Solidario Japan Fund for Poverty Reduction Girls Scholarship

Program (Cambodia)

Education Sector Support Project (Cambodia)

Niche (regional or

narrow target population) Social Risk Management Project (Turkey)

Basic Education Development Project (Yemen)

Programa de Asignación Familiar (Honduras) Cash Transfer for Orphans and Vulnerable Children

(Kenya)

Subsidio Condicionado a la Asistencia Escolar - Bogota (Colombia) Tayssir (Morocco)

Atención a Crisis (Nicaragua)

Prog

ram

size

/targ

et

Small scale/pilot

Red de Protección Social (Nicaragua)

Punjab Education Sector Reform Program (Pakistan)

CCT impacts on poverty

Message 1: CCTs have generally led to substantial reductions in consumption poverty—in particular, when transfers are large In Nicaragua, the Red de Protección Social, a

pilot program, reduced the poverty gap among beneficiaries by 18 percent

In Mexico, PROGRESA (now Oportunidades), a program with national coverage, reduced the poverty gap in rural areas by 19 percent

Impacts on consumption and poverty

Mexico(1999)

Nicaragua(2002)

Colombia(2006)

Honduras(2002)

Average transfer (% of per capita consumption)

20% 30% 13% 11%

Impact on per capita consumption (%)

8.3%** 20.6%** 10%** 7%*

Impact: headcount index (% points)

1.3** 5.3** 2.9* --

Impact: poverty gap (% points)

3.0** 9.0** 7.0** 2.0*

Impact: sqd. poverty gap (% points)

3.4** 8.6** 2.2** 2.0*

CCT impacts on poverty

Why have CCTs reduced consumption poverty? They are well-targeted They have made transfers of (in some cases) substantial

magnitude They have not reduced adult labor market participation They have not generally crowded out other transfers, and

have not had substantial (local) general equilibrium effects

Transfers (which are generally made to women) have also changed the composition of consumption More expenditures on food, and on higher-quality

sources of calories

CCT impacts on food consumption

Impacts on health and education outcomes

Message 2: CCTs have resulted in substantial increases in the utilization of education and health services – especially among poor households

Examples — education: In Mexico, Oportunidades decreased dropout between 6th and 7th

grade by 9% points In Pakistan, the Punjab Education RSP increased the school

enrollment of 10-14 year-old girls by 11% points In Cambodia, two pilot programs reduced the dropout between 6th

and 7th grade by 20-30% points Examples — health:

In Colombia, Familias en Acción increased the proportion of children who had growth monitoring by 20-30% points

In Honduras, PRAF increased the proportion of children who had at least one preventive health visit by 20% points

Impacts on school enrollment

Age range Baseline enrollment

Impact (% points)

Size of transfer

Colombia 8-1314-17

91.7%63.2%

2.1**5.6***

17%

Chile 6-15 60.7% 7.5*** 3-7%

Ecuador 6-17 75.2% 10.3*** 10%

Mexico Grade 0-5Grade 6

Grade 7-9

94.0%45.0%42.5%

1.98.7***

0.620%

Nicaragua 7-13 72.0% 12.8*** 30%

Cambodia Grade 7-9 65.0% 31.3*** 2%

Pakistan 10-14 29.0% 11.1*** 3%

Impacts on health service utilization

Age range

Baseline level

Impact

(% points)

Size of transfer

Colombia <24 months

24-48 months

n.a.

n.a.

22.8**

33.2***

17%

Chile 0-6 years 17.6% 2.4 7%

Ecuador 3-7 years n.a. 2.7 10%

Honduras 0-3 years 44.0% 20.2*** 9%

Mexico 0-3 years 69.8% 8.4 20%

Nicaragua 0-3 55.4% 13.1* 27%

Impacts are concentrated on the poorest households

Example: Nicaragua

Impacts on education and health outcomes

Message 3: Despite increase in service utilization, CCTs have had only mixed success in terms of improving final outcomes in education and health:

Education Increases in school enrollment and years of completed

schooling have not come hand-in-hand with improved learning outcomes

Health Some programs, but my no means all, have improved child

nutrition (as measured by height-for-age, hemoglobin status)

CCT impact on child nutrition

Age range

Baseline level

Impact (% points)

Size of transfer

Colombia <24 months

24-48 months

n.a. 0.16**

0.01

17%

Ecuador <24 months

24-48 months

-1.07

-1.12

-0.03

-0.06

10%

Mexico 12-36 months

n.a. 0.96 cm** 20%

Nicaragua <60 months -1.79 0.17** 27%

Honduras <72 months -2.05 -0.02 9%

Impacts on child development (children age 3-6)

Nicaragua Ecuador (poorest 40%)

Ecuador (poorest 10%)

Receptive language 0.223***(0.078)

0.011(0.108)

0.177(0.148)

Memory 0.092(0.072)

0.192*(0.105)

0.228**(0.109)

Socio-emotional 0.067(0.065)

0.150(0.103)

0.389**(0.159)

Fine motor 0.150(0.110)

0.160**(0.076)

0.288**(0.117)

Note: all program impacts are in standard deviations.

Outline

1. Present findings of report

2. Discuss implications for social policy

Designing transfers to maximize impact on human development outcomes

Which behaviors should be targeted? Quality of services: what kind of services are

beneficiaries of welfare programs actually receiving?

Incentives to service providers Intermediation services

Conditioning on outcomes? If under control of beneficiaries (e.g. STDs) If combined with incentives to providers (e.g. learning

outcomes) Bonuses

Designing transfers to maximize impact on human development outcomes

Change behaviors within households that prevent the accumulation of human capital.

Programs to improve parenting and early stimulation (as in the “pláticas” of Oportunidades or social-worker support as in Chile Solidario)

Targeting the right age group Life-cycle skill formation as dynamic process

(Heckman et al.) Early stimulation and pre-school programs

Why condition?

Economic justifications Persistently misguided beliefs “Incomplete altruism” Externalities

Political economy justifications Greater support for a program that appears to ask

beneficiaries to do “something to help themselves” CCTs as new “contract” between the state and

beneficiaries. Emphasis on “co-responsibilities” not “conditions

Research on social perceptions (e.g. Brazilian press, Argentina opinion polls)

Do conditions work?

Conditions do play a role in increasing service use beyond income effect (at least in education)

Mexico: Children in households w/o monitoring 5.4% points less likely to enroll in school

Ecuador: Program effects are only significant for households that believed transfer are ‘conditional’

Cambodia: Program has no effect on enrollment for siblings at other levels

Avoiding negative effects of transfers

Why didn’t CCTs have negative effects on labor supply?

Leisure effect: low b/c of fine targeting Avoided high marginal tax rates by use of proxy-

means and infrequent update

Design options Time limits (Chile) Graduated benefits (Brazil) Combining with other programs (e.g. workfare)

Institutional Issues

CCTs have had important institutional legacies CCTs have led the way in the design of well-

run administrative structures for beneficiary selection, payments, transparency

CCTs have been groundbreaking in terms of the importance they have paid to impact evaluation with credible counterfactuals

END