In the last decade, conditional cash transfer (CCT) programs are probably the key social policy innovation around the world and in the East Asia and Pacific region. The targeted programs offer money to poor households on the condition they make pre-specified investments in the human capital of children. Typically, this involves school enrollment and attendance, and basic preventive health activities such as periodic checkups, growth monitoring, and vaccinations for young children. Often, programs also involve some information campaigns targeting mothers.
Driven in great part by the fact that CCT programs have been rigorously evaluated and shown to have positive impacts, they have become extremely popular in the developing world. Ten years ago, CCTs were being implemented as pilots in a handful of countries. Today close to three dozen developing countries have either a well-established CCT or are in the process of starting one. In some countries, CCTs have become the largest social assistance program, covering millions of households, as is the case in Brazil and Mexico. Interest in CCT programs is also growing in East Asian countries, including Indonesia, Cambodia and the Philippines.
|Conditional cash transfer programs aim to increase school enrollment and children's health. Programs often involve information campaigns for mothers.|
During a recent trip to Manila, I had the pleasure to speak at a seminar jointly organized by the World Bank and Government authorities to review the current status of the program and provide a global perspective. It is clear to me that authorities, academics, civil society and the press in the Philippines have similar concerns to those of their counterparts in other countries that have implemented CCT programs. What effects should we expect? Will they create work desincentives? What does it take to have an effective CCT program?
In a soon-to-be released World Bank report entitled Conditional Cash Transfers: Reducing Present and Future Poverty, we show there is good evidence that CCTs have improved the lives of poor people. Transfers generally have been well-targeted to poor households, raised consumption levels, and reduced poverty, in some countries, by a substantial amount. Fear from some policy makers and researchers that offsetting adjustments (such as reduced labor market participation or increased fertility rates) may result from cash transfer programs either were not observed or were modest.
CCTs have also led poor households to make more use of health and education services, a key objective for which they were designed. Perhaps not surprisingly, however, this increase in the use of services does not automatically translate to improvements in health. Education results are more mixed. For example, a few studies found that the increases in school enrollment rates were not matched by improvements in learning outcomes. In other words, children who have benefitted from CCTs and completed more years of schooling do not seem to have learned more. Still, I’d argue that to achieve the desired improvements in human development outcomes, such as reduced child mortality and improved learning, CCTs may need to be complemented with better supply of education and health services. Also important is a stronger focus on giving children a headstart through, for example, better nutrition programs or pre-school interventions.
CCT programs provide a powerful proof that well-designed public programs can have significant effects on critical social indicators. CCTs also have had positive institutional results. Most notably, through their emphasis on monitoring and evaluation, they have helped strengthen a culture of results and accountability within the public sector, at least within social policies. That strengthening is clearly a legacy worth sustaining.
My message (pdf) at the seminar was the journey the country has embarked on can be a very productive one. If well-implemented – and this requires strong attention to good management, proper monitoring and evaluation, and zealous concern for accountability – a CCT program can provide a powerful entry point to improve the quality of public policies, replacing ineffective safety net programs and promoting better delivery of health and education services. I look forward to visiting the Philippines in the not-to-distant future to learn more about the country’s experience implementing its CCT program.