conditional cash transfers
This is the seventh in this year's series of posts by PhD students on the job market.
Conditional cash transfers (CCTs), cash transfers targeted to poor households made conditional on investments in children's human capital, have become increasingly popular over the past two decades (Bastagli et al, 2016). However, CCTs have been criticized as some argue that the poorest households may find the conditions too costly to comply with and thus be excluded from receiving aid (e.g., Freeland, 2007, Baird et al, 2011). Unconditional cash transfers (UCTs), cash transfers with “no strings attached”, are therefore thought to be superior at alleviating current poverty. Consequently, when deciding whether to impose conditions, governments are thought to trade-off the extent to which they increase human capital investments in children versus the extent to which they alleviate current poverty.
Update (January 22, 2019): The paper discussed in this post has subsequently been published in the journal World Development.
Cash transfers seem to be everywhere. A recent statistic suggests that 130 low- and middle-income countries have an unconditional cash transfer program, and 63 have a conditional cash transfer program. We know that cash transfers do good things: the children of beneficiaries have better access to health and education services (and in some cases, better outcomes), and there is some evidence of positive longer run impacts. (There is also some evidence that long-term impacts are quite modest, and even mixed evidence within one study, so the jury’s still out on that one.)
In our conversations with government about cash transfers, one of the concerns that arose was how they would affect the social fabric. Might cash transfers negatively affect how citizens interact with each other, or with their government? In our new paper, “Cash Transfers Increase Trust in Local Government” (can you guess the finding from the title?) – which we authored together with Brian Holtemeyer – we provide evidence from Tanzania that cash transfers increase the trust that citizens have in government. They may even help governments work a little bit better.
This is the seventeenth, and penultimate, of this year’s job market series.
Research question and motivation
That early-life events can affect adult outcomes is now well established. Lifelong health, education, and wages are all shaped by events of the in-utero and early-childhood environments (Barker 1992; Cunha and Heckman, 2007; Almond et al., 2017). To the extent that adverse shocks can often not be prevented, a key task for researchers and policymakers is to ascertain the potential for and degree of mitigation: Could investing in children's health and education help reduce gaps caused by early-life adversities?
In my job-market paper, we study whether the returns on human capital investments on children differ by exposure to adverse early-life shocks. We focus on two shocks that significantly affect households in developing countries: adverse weather shocks -- i.e., floods and droughts, which reduce children's initial skills--, and the introduction of conditional cash transfers (CCTs), which provide monetary subsidies to families with young children conditional on investments in children's health and education. In particular, we provide empirical evidence on how the effects of CCTs on children's long-term educational outcomes interact with children's early-life exposure to adverse weather shocks.
Cash transfers are great – lots of people are telling you that on a continuous basis. However, it is an open question as to whether such programs can improve the wellbeing of their beneficiaries well after the cessation of support. As cash transfer programs continue to grow as major vehicles for social protection, it is increasingly important to understand if these programs break the cycle of intergenerational poverty, or whether the benefits simply evaporate when the money runs out…
A whirlwind, surely incomplete tour of cash transfer impacts on health
Your run-of-the-mill conditional cash transfer (CCT) program has significant impacts on health-seeking behavior. Specifically, there are conditions (or co-responsibilities, if you prefer) that children get to school and/or that they get vaccinated or have some wellness visits. While the school enrollment effects are well established, the effects on both health seeking behavior and on health outcomes have been much more mixed. CCTs have led to better child nutritional status and improved child cognitive development in Nicaragua, better nutritional outcomes for a subset of children in Colombia, and had no impacts for child health in studies on Brazil and Honduras. CCTs conditioned only on school enrollment did not lower HIV infections among adolescent girls in South Africa; and in Indonesia CCTs increased health visits but did not translate into measurably improved health. Unconditional cash transfer programs have also had mixed results on health, with better mental health and food consumption in Kenya, better anthropometric outcomes for girls (not boys) in South Africa, no average impacts (although some for the poorest quarter) on child outcomes in Ecuador, and no average impacts on maternal health care utilization in Zambia (albeit yes effects for women with better access to such services).
On September 30, the Guardian ran several articles (see here, here, and an editorial here) linking the halving of Peru’s stunting rate (from 28 to 14% between mid-2000s and 2015) to its CCT program Juntos. Of course, it is great to hear that the share of stunted children in Peru declined dramatically over a short period. However, as I know that while CCT programs (conditional or not) have been successful in improving various outcomes including child health, the effect sizes are never this dramatic, I was curious to see whether the decline was part of a secular trend in Peru or actually could be attributed primarily to Juntos…
This post is jountly authored by Martina Björkman Nyqvist, Lucia Corno, Damien de Walque and Jakob Svensson.
Conditional cash transfers (CCTs) and other types of financial incentives have been used successfully to promote activities that are beneficial to the participants such as school attendance and health check-ups for children. CCTs pay a certain amount if the condition is verified.
Lotteries can also be used as an incentive. Instead of being paid a certain amount, the participants who satisfy the condition receive a lottery ticket, a random draw is performed among the tickets, and a predetermined number of winners earn a lottery prize. The value of the lottery prizes would be higher than the typical CCT amount, but the number of recipients of the prizes would be lower.