Conditional Cash Transfer: a vaccine against poverty and inequality?

.Poverty, CCT, Cash Transfers

SOME STYLIZED FACTS OF THE INFORMAL SECTOR IN BRAZIL IN THE LAST TWO DECADES

Two facts have characterized the evolution of the informal sector in Brazil during the last two decades: the increase in the proportion of non-registered workers and the diminishing wage gap between non-registered and registered workers. In this paper, we document both the increase of the informal sector and the fall in the wage gap in Brazil. Besides, we investigate which factors were responsible for the fall in the wage gap and how this reduction has contributed to reduce wage inequality between 1981 and 1999. Among our findings, we would highlight: 1) the coincidence between these two movements and the market-oriented reforms of the early 1990's; 2) that the fall in the formal/informal wage gap has substantially contributed to the decrease in wage inequality. After education, the fall in the wage premium due to the possession of a work-card was the main responsible for bringing down wage inequality. Why and how it happened is an open debate. We speculate that the trade liberalization process of the early 1990's and the increasing indexation of informal sector wages to the minimum wage may be behind these phenomena.

The impact of trade liberalisation on the informal sector in Brazil

We assess whether or not the trade liberalisation process in Brazil had any effect on both the reduction in the wage differential between registered and non-registered (roughly formal and informal) workers and the fall in the proportion of registered workers. We discuss the channels through which trade liberalisation could affect these two variables and put forward three empirical approaches to test the existence of any correlation between them. Our results suggest that the fall in the wage gap between registered and non-registered workers in the manufacturing sector was affected by trade-related variables, particularly, by the import penetration ratio. However, we do not find robust evidence that trade liberalisation had a substantial effect on the fall in the proportion of registered workers.Trade Liberalisation, Wage differential, Informal Sector, Developing Countries

MINIMUM WAGE HIKES AND EMPLOYMENT TRANSITIONS IN BRAZIL

This paper investigates the effect of the minimum wage on employment transitions in Brazil and, in particular, on the informal sector transitions. We estimate the probability of becoming nonemployed (unemployed or out of the labour force) and the probability of moving to the informal sector after minimum wage hikes. We estimate these effects separately for periods with high and low inflation to assess how agents react to minimum wage hikes under different inflationary expectations, particularly, under different degrees of wage indexation. Workers affected by minimum wage increases are compared with similar workers further up in the wage distribution. In order to account for heterogeneity between the treated minimum wage workers and the comparison groups we use a difference-in-differences approach that compares treated and comparison groups in periods with nominal increase in the minimum wage with periods with no increase. In this last case the comparison and treated groups are defined as if there had been an increase in the minimum wage (pseudo-experiment). Such strategy is applied in a parametric way via probit estimates and also in a nonparametric way using kernel propensity score matching method. Our findings suggested that disemploymet effects were more likely to be observed in the late 1990´s than in the early 1980´s. This negative effect affects in 1990 affects both informal and formal workers, but it is not a characteristic of all minimum wage hike episodes. We also find no robust evidence that minimum wage hikes lead to transitions from the formal to the informal sector.

Do CCTs Lessen the Impact of the Current Economic Crisis? Yes, but...

The recent financial and economic crisis has sparked a debate on whether conditional cash transfer (CCT) programmes make families less vulnerable to that crisis. This link between the crisis and CCTs was made because countries like Brazil, which have large CCT programmes, were enduring the impacts better than most others.Do CCTs Lessen the Impact of the Current Economic Crisis? Yes, but...

Cash Transfers ? Lessons from Africa and Latin America

Cash transfer programmes are emerging as indispensable component of poverty reduction strategies. The objectives of alleviating short-term poverty and long-term human capital building are what make cash transfers, particularly conditional ones, attractive. In Latin America, where cash transfers are widely implemented, impact evaluations show significant positive impacts. Improved nutritional intakes, access to health and education as well as reduction in poverty and inequality are observed. The International Poverty Centre has a comprehensive research agenda on cash transfer programmes. The work mainly focuses on comparative studies in selected countries in Latin America and Sub-Saharan Africa. The Centre, in collaboration with international and bilateral agencies, also carries out both quantitative and qualitative analyses of the impact of cash transfers on poverty and inequality. (...)Cash Transfers ? Lessons from Africa and Latin America

Empowering or Reinforcing Traditional Roles: Can CCTs Address Gender Vulnerabilities?

Most conditional cash transfer (CCT) programmes in Latin America select a woman as the primary recipient of the transfer. In most cases she is the mother of children in the household or the woman responsible for those children. The rationale behind this is that the money spent by women tends to be concentrated more on goods and services that are more likely to have a positive effect on the children?s well-being. (?)Empowering or Reinforcing Traditional Roles: Can CCTs Address Gender Vulnerabilities?

?Growing Pains?: Key Challenges for New Conditional Cash Transfer Programmes in Latin America

Growing Pains; Challenges; Conditional Cash Transfer; Programmes; CCT, Latin America

Confronting Capacity Constraints on Conditional Cash Transfers in Latin America: the cases of El Salvador and Paraguay

This Working Paper offers an institutional overview and comparative analysis of the Conditional Cash Transfer (CCT) experiences of El Salvador (Red Solidaria) and Paraguay (Tekoporã). We focus on the potential contradictions and tensions that arise from the double objectives of these programmes?namely, short-run poverty alleviation and breaking the intergenerational transmission of poverty though human capital accumulation. We also examine how both programmes address these tensions and compare their approaches regarding implementation issues and administrative and institutional factors. We argue that political economy issues play an important role in the decisions taken regarding targeting criteria, monitoring of conditionalities, graduation from the programme, and exit rules. These programme features are not necessarily coherent with one another because they pursue different objectives and are justified by differing rationales. These problems might be exacerbated in a scenario?common in many developing countries?characterized by financial and institutional capacity constraints and, sometimes, weak political support for a CCT programme.Poverty; Cash Transfers; Government Programme; El Salvador; Paraguay

Targeting and Coverage of the Bolsa Família Programme: Why Knowing What You Measure Is Important In Choosing the Numbers

The trade-off between targeting and coverage has always been something of a quandary for progressive cash transfers, particularly those that are not entitlements. Undue inclusion errors mean that families or individuals whose need is not so great are being paid at the expense of either taxpayers or other budgetary priorities. Undue exclusion errors mean that those who are in need, sometimes in desperate need, are not being helped by the state. This trade-off is somewhat less extreme for entitlements. If the law says that families whose income is less than a quarter of a minimum wage are entitled to a given cash allowance, then all those whose income falls under that line should receive the allowance. There is still a trade-off because measurement error still occurs, but the discussion centres only on the inclusion criteria. Most conditional cash transfers (CCTs), however, are not entitlements. (...)Targeting and Coverage of the Bolsa Família Programme: Why Knowing What You Measure Is Important In Choosing the Numbers