Co-authored with Richard Akresh and Harounan Kazianga
Social safety nets are actively promoted in developing countries both as responses to financial crises and as mechanisms to alleviate poverty. Conditional cash transfers, which are now common in Latin America but remain rare in other regions, are also seen a way to reduce future poverty by investing in the human capital of the next generation (Fiszbein and Schady, 2009). While both conditional cash transfers (CCTs) and unconditional cash transfers (UCTs) provide poor households with resources, UCT programs do not impose conditionality constraints. An important question is whether and how conditions influence the outcomes they seek to improve.
In a recent working paper, we present evidence of the education impacts from a cash transfer pilot program in rural Burkina Faso, the Nahouri Cash Transfers Pilot Project (NCTPP). The NCTPP incorporated a random experimental design to evaluate the relative effectiveness of conditional and unconditional cash transfers targeting poor households in the same setting in rural Burkina Faso. We focus on the differential impact of those two types of cash transfers on the educational outcomes of children between the ages of 7 to 15.
CCTs work better than UCTs for “marginal” children
We develop and empirically test the hypothesis that CCTs will be more effective than UCTs in improving the enrollment of “marginal children”, those who are less likely to go to school, such as girls, younger children, and children with lower cognitive ability. We observe that parents in this setting often decide strategically to invest more in the education of some of their children (see our previous research using our baseline survey to explore this issue). Because our sample population includes all children (boys and girls ages 7-15), we can explicitly measure the differential impacts of conditionality on “marginal” children compared to other children.
Our results indicate that CCTs are more effective than UCTs in improving the enrollment of “marginal” children, those who are are less likely to go to school, including girls, younger children, and lower ability children: With yearly transfer amounts of $17.6 for children ages 7-10 and $35.2 for children ages 11-15, we find that:
· CCTs led to statistically significant increases in enrollment of 20.3 percent for girls, 37.3 percent for younger children, and 36.2 percent for low ability children relative to mean enrollment in those sub-groups.
· For these same categories of marginal children, UCTs either had no statistically significant impact or showed an impact that was significantly smaller than the CCT effect.
However, we find that UCTs and CCTs have similar impacts in increasing the enrollment of children who are traditionally prioritized by parents for school participation, including boys, older children, and higher ability children.
· We find enrollment increases due to CCTs and UCTs respectively of 21.8 and 22.2 percent for boys, 17.4 and 14 percent for older children, and 27.0 and 28.5 percent for higher ability children.
We graphically illustrate these results in Figures 1 and 2 in which we compare the percentage increases in enrollment in the UCT and CCT villages by gender (Figure 1) and by age group and ability level (Figure 2).
Reconciling our findings with Baird, McIntosh, and Özler’s 2011 results in Malawi
Our results shed new light on the role of conditionality in cash transfer programs. While there is credible evidence that both types of transfer schemes can substantially improve child education, only one published study explicitly compares conditional and unconditional cash transfers in the same context (Baird, McIntosh, and Özler, 2011). They examine the impact of conditionality on the drop-out rates of adolescent girls enrolled at baseline in Malawi and find that CCTs are more effective than UCTs for these girls. Our results are different from theirs. We find that CCTs are more effective than UCTs for marginal children, while UCTs are equally effective as CCTs for non-marginal children. However, we might be able to reconcile the results from Malawi and Burkina Faso. If we consider that in Malawi adolescent girls in secondary school (the focus of the Malawi experiment) may be considered as “marginal” children from an education point of view, then our marginal child hypothesis would predict that for them CCTs would be more effective than UCTs.
Our cash transfer intervention in Burkina Faso focused on a broad range of child age and gender and on both margins of school enrollment (bringing non-enrolled children into school and reducing drop-outs) and therefore allows us to investigate how conditionality works and specifically for which types of children it works best for. In resource-poor settings, both UCTs and CCTs relax the budget constraint and allow households to enroll more of the children they would traditionally prioritize for human capital investments. But the conditions attached to CCTs play a critical role in improving the outcomes of children for whom parents are less likely to invest.
Implications for policy
The policy implications of our results are clear: the choice between CCTs and UCTs should be influenced by the objectives of the education policy.
· If the objective is to increase overall enrollment, UCTs might have comparable effects to CCTs.
· If the policy objective also includes an emphasis on improving the enrollment and educational outcomes of categories of children who are less likely to be part of the education system, then CCTs are likely to have larger impacts and be more cost-effective. That conclusion is especially relevant in the context of Millennium Development Goal 3 which focuses on reducing the gender gap in education.
From a policy-making perspective, our study also addresses the feasibility of conditional cash transfer schemes in the sub-Saharan African context. Since CCT programs rely on a certain level of administrative capacity (the ability to target households, plan meetings to notify households of their obligations and rights, monitor household compliance and conditionality, and transfer funds to families), there is a debate on whether these programs, which have been successful in Latin America, can be successfully implemented by African central or local governments.
The cash transfer program we study relied on existing government structures and was implemented in an environment where there is no systematic population registration and where formal banking is almost non-existent. The logistics of the cash transfers did not involve advanced technologies. The government distributed the cash transfers during a meeting convened every quarter in a central location in each village. In the CCT villages, school enrollment and attendance were verified with a signature by the school director in a program booklet, with a random audit of the school register for a subset of children. Even though our study was a two-year pilot limited to one province and its scalability remains to be investigated, it nevertheless indicates that CCTs can be implemented and be effective in an environment with limited administrative capacity.
Richard Akresh is an Assistant Professor of Economics at the University of Illinois at Urbana-Champaign.
Damien de Walque is a Senior Economist in the Development Research Group at the World Bank
Harounan Kazianga is an Assistant Professor of Economics, Department of Economics, William Spears School of Business, Oklahoma State University
 We are aware of one other cash transfer project in Morocco, the Tayssir program, with a design similar to ours, which examines the impact of conditionality on educational outcomes.