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United Nations Development Programme
Conditional Cash Transfers:
A Vaccine against Poverty and Inequality?
          October, 2004          Number  3
by Fábio Veras Soares, International Poverty Centre
Conditional Cash Transfers (CCT) have been regarded
worldwide as the latest ‘silver bullet’ to fight poverty and inequality.
This reputation is largely based on the positive evaluations of the
Latin American experiences, such as Progresa in Mexico, Bolsa Escola
and Bolsa Alimentacao in Brazil (now unified into Bolsa Familia), and
Familias en Accion in Colombia. Defenders of such programmes
emphasize that their virtues consist in attacking both long- and
short-term poverty and inequality.
The short-term strategy is based on cash transfers to poor families
with an immediate effect on poverty, depending on the level of the
benefit and the efficiency of the targeting strategy. The long-term
effect depends on the effectiveness of the conditionalities attached
to the transfers, both in terms of their enforcement and their real
power in boosting human and social capital. Conditionalities
include compulsory children’s attendance at school, mandatory
visits to health centres, and monitoring of nutrition and
immunisation. In general, these conditionalities focus on children in
order to break the intergenerational transmission of poverty.
Some specialists argue that the conditionalities are not necessary
since cash transfers already address the credit constraints faced by
poor families. Thus, their increased incomes help improve education,
health and nutrition achievements. However, conditionalities can also
have other relevant effects. For instance, they can help to change
some cultural features that jeopardize the chances of children of poor
familys from getting out of poverty. For example, there is evidence in
Brazil that families whose heads worked while they were children are
more likely to send their children to work. In cases like this,
conditionality might prompt a cultural change that would protect
these children from an early entry into the labour market.
In the real world, specific CCT programmes differ in design,
implementation and goals. Examining the Brazilian experience
can be informative. During the 1990s, there were several
municipal and state-level programmes whose design inspired
the Federal Bolsa Escola, which started in 2000. The only Federal
programme in place in the late 1990s in Brazil was the PETI
(Programme for the Eradication of Child Labour). Whereas the main
direct goal of the municipal and state-level Bolsa Escola
programmes was to increase school enrolment and attendance,
the chief goal of PETI was to reduce child labour in hazardous
activities by means of increases in school enrolment and attendance.
The evaluations of these two programmes show that they were
successful with regard to their objectives. Bolsa Escola increased both
enrolment and attendance rates, but had no effect on child labour
(Cardoso and Souza, 2004), whereas PETI increased enrolment and
attendance rates as well as reduced child labour (Soares and Pianto,
2003). None of them had a substantial impact on poverty, due to the
small value of the cash transfers.
Why, unlike PETI, did Bolsa Escola not have the side effect of reducing
child labour, despite increasing both enrolment and attendance rates?
A distinguishing characteristic of PETI was that it provided resources to
participant municipalities to offer extra-curricular activities in order
to keep children busy during the whole day. There is evidence that
where these after-class activities were widely used, child labour
declined more sharply. Moreover, since PETI was a smaller programme
and more clearly focused, it could more easily achieve its goals.
A large-scale programme, such as the new Federal programme, Bolsa
Familia, certainly faces problems in enforcing its conditionalities, and
therefore, in achieving positive externalities, such as reducing child
labour. However, the problems in enforcement of conditonalities are
not the only threat to the long-term goals of CCT programmes.
One of the main doubts hanging over CCTs is how their long-term
goals will be achieved without improving the supply of quality
education and health services for the targeted population. Besides
enforcing conditionalities, it is necessary to improve the quality of
social services so that the promises of a break in the intergenerational
cycle of poverty can be fulfilled. Now that there is a mountain of
evidence about the success as well as  the limitations of CCTs (mainly
in Latin America), it is certainly time to pay attention to the quality of
public services so that the glowing promises of a long-term decline in
poverty and inequality are not short-lived.
References:
Cardoso, E. and Souza, A. P. (2004). “The Impact of Cash Transfers on Child Labor and School
Attendance in Brazil”. Mimeo.
Soares, S. and Pianto, D. M. (2003). “Use of Survey Design for the Evaluation of Social programs:
The PNAD and the Program for the Eradication of Child Labor in Brazil”, mimeo, Urbana-Champaign:
University of Illinois.

Use of Survey Design for the Evaluation of Social programs: The PNAD and the Program for the Eradication of Child Labor in Brazil”, mimeo, Urbana-Champaign:

Conditional Cash Transfer: a vaccine against poverty and inequality?

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Conditional Cash Transfer: a vaccine against poverty and inequality?

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