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6 CCCTs? Conditional Cash Transfers in the Context of Social Policy

6 CCCTs? Conditional Cash Transfers in the Context of Social Policy. Arup Banerji Director, Social Protection and Labor, World Bank Budapest, May 7 2010. 6 CCCTs? 6 Conditions for Conditional Cash Transfers. Demand for CCTs. Supply of CCTs.

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6 CCCTs? Conditional Cash Transfers in the Context of Social Policy

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  1. 6 CCCTs?Conditional Cash Transfers in the Context of Social Policy Arup Banerji Director, Social Protection and Labor, World Bank Budapest, May 7 2010

  2. 6 CCCTs?6 Conditions for Conditional Cash Transfers Demand for CCTs Supply of CCTs • Structural poverty in families with children is a major concern • There is under-investment in core activities that can break the poverty cycle • There is shared political support for “mutual obligation” schemes • There is access to good quality services (schooling, clinics) available to the target groups • There is enough information to be able to target transparently and set entry/exit rules • There are no major overlaps with other cash transfers that may cause incentive ‘traps’

  3. Demand for CCTs: 3 Questions

  4. Demand for CCTs: 3 Questions 1. Is structural poverty a major concern for families with children?

  5. Are families with children (more) at risk of poverty?

  6. Risk of poverty of specific age groups in Europe Source: Lelkes, Medgyesi and Tóth

  7. Demand for CCTs: 3 Questions 1. Is structural poverty a major concern for families with children? 2. Is there under-investment in core activities that can break the poverty cycle ?

  8. Potential under-investment in education (baselines for CCTs)

  9. Under-investment in secondary education by Hungarian Roma % of cohort population, Hungary, 2003 Source: Kertesi and Kezdi (2006)

  10. Returns to Schooling Matter?

  11. Demand for CCTs: 3 Questions 1. Is structural poverty a major concern for families with children? 2. Is there under-investment in core activities that can break the poverty cycle ? 3. Is there shared political support for “mutual obligation” schemes?

  12. CCTs have addressed political constraints to giving social transfers to the poor • Arguments about whether all the poor are “deserving” led to the first “workfare” schemes in the US, which imposed a mutual obligation to work in exchange for welfare payments • Modern European “activation” policies also have “mutual obligation” characteristics as part of the social contract • The state is re-stated as a partner rather than a charity, and the poor as responsible rather than dependent • In Mexico, Levy and Rodriguez (2004) explicitly write: • Shared responsibility and respect inevitably imply a reciprocal effort by poor families to link the benefits they receive to concrete actions on their part … this is independent of technical considerations

  13. Supply of CCTs: 3 Questions

  14. Supply of CCTs: 3 Questions 4. Do the target groups have access to good quality and complementary services?

  15. Final outcomes in CCTs are often worse because of inadequate supply • Most CCT evaluations find little effect on learning outcomes, even though school attendance increase • Longer exposure to Oportunidades program doesn’t improve learning scores (Behrman, Parker, Todd 2000 and 2005) • More years of schooling does not improve mathematics or language scores in Cambodia (Filmer and Schady 2009) • Most recently, overall school outcomes for elementary or middle school students in New York City’s Opportunity program did not increase despite increased school attendance • A major reason is the quality of schools (or clinics) may not be enough to improve outcomes just because of increased exposure • Distance may also matter – Oportunidades has less impact on children who live more than 4 km from a secondary school

  16. Is there adequate supply of quality schooling for disadvantaged groups? • “… the Roma schools are considered by most teachers as undesirable working places, as teaching and education here requires above average effort and results in less success. • … Although the teachers’ work in schools where the majority of students are Roma requires a lot more than average effort, the wages are just as low as in any other school.” • Source: Havas, Kemény and Liskó [2002], quoted in Kertesi and Kézdi [2005] 2007. Source: OECD 2010

  17. Some US welfare reforms have explicitly recognized multiple barriers • The most successful example was the Minnesota Family Independence Program (1994-98). Basic aim: To improve on the results on AFDC program in reducing poverty through work • Recognized, and addressed fact that welfare families faced multiple barriers: • Inadequate education • Poor work skills • Little work experience • Child care responsibilities • Transportation constraints • Physical, emotional, addiction issues • Therefore, paired employment opportunities with: • Increased support for skills improvement • Help with child care • Health care • Compared to AFDC as usual, MFIP stayed on welfare longer, but were less likely to be poor when they left; • Children’s outcome (attendance, performance, and health) improved

  18. CCT programs also address complementary factors • Chile Solidario program has psycho-social support to beneficiaries • Social workers work with families on action plans covering 53 “minimum conditions” along 7 dimensions: • Identification and legal documentation • Family dynamics • Education • Health • Housing • Employment • Income • In Mexico, Oportunidades conditions transfers on new or expecting parents participating in talks (pláticas) on parenting, hygiene and nutrition • Evidence that these have encouraged better diets and improved knowledge on health • Hungary already has introduced pre-schooling support to disadvantaged parents in January 2009, which will help

  19. Supply of CCTs: 3 Questions 4. Do the target groups have access to good quality and complementary services? 5. Is there enough information to be able to target transparently and set entry/exit rules?

  20. Proxy means tests to target can avoid labor supply disincentives • Associating eligibility to income thresholds can create labor disincentives (as had historically been found in US TANF and AFDC) • Proxy means, which use household datasets to “predict” which households are poor based on observable “proxies”, can reduce the disincentive • However, devising proxies when poor and non-poor households are too similar in characteristics can be difficult

  21. The poor are generally clustered together in Eastern European Countries Source: Tóth (TÁRKI EUROPEAN SOCIAL REPORT) 2008

  22. Supply of CCTs: 3 Questions 4. Do the target groups have access to good quality and complementary services? 5. Is there enough information to be able to target transparently and set entry/exit rules? 6. Are there no major overlaps with other cash transfers that may cause incentive ‘traps’?

  23. Incentive effect of CCTs muddied if too many programs transferring resources • In Mexico, part of the impetus to introduce CCTs was to remove and substitute for 15 broad price subsidies • Half of social funding went to subsidies for tortillas and bread, used by non-poor households • Little coordination across programs, inefficient duplication of administration, and no evaluation of effectiveness

  24. In 2006, cash transfer programs in Hungary included: • Old age pension • Disability benefits • Maternity Allowance (Terhességi-gyermekágyisegély): • Maternity Grant (Anyaságitámogatás): • Child Care Allowance (Gyermekgondozásisegély) • Child Care Fee (Gyermekgondozásidíj) • Child Raising Support: (Gyermeknevelésitámogatás) • Family Allowance (Családipótlék) • Advance on maintenance payments (Tartásdíj megelőlegezése) • Regular Child Protection Benefit (Rendszeresgyermekvédelmitámogatás) • Irregular Child Protection Benefit (Rendkívüligyermekvédelmitámogatás) • Family tax allowance (Családiadókedvezmény) • Regular social benefit (Rendszeresszociálissegély) • Nursing Fee (Ápolásidíj) • Old-age Allowance (Időskorúak járadéka) • Home Maintenance Support (Lakásfenntartásitámogatás) • Debt-management Benefit (Adósságcsökkentésitámogatás) • Public Health Benefit (Közgyógyellátás) • Temporary Benefit (Átmenetisegély) • Funeral Support (Temetésisegély) • Home renting support (lakbértámogatás) • Interest-free social loan (kamatmentesszociáliskölcsön) • Meals support (étkezésitámogatás) • Local transportation support (helyiutazásitámogatás) Source: TARKI (2006)

  25. Tax-welfare interactions also may give disincentives to work

  26. 6 CCCTs?6 Conditions for Conditional Cash Transfers Demand for CCTs Supply of CCTs • Structural poverty in families with children is a major concern • There is under-investment in core activities that can break the poverty cycle • There is shared political support for “mutual obligation” schemes • There is access to good quality services (schooling, clinics) available to the target groups • There is enough information to be able to target transparently and set entry/exit rules • There are no major overlaps with other cash transfers that may cause incentive ‘traps’

  27. Further information available at www.worldbank.org/socialprotection

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