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Presented by Luke Okafor and Elizabeth Rivard

CONDITIONAL CASH TRANSFERS, SCHOOLING AND CHILD LABOR: MICRO-SIMULATING BOLSA ESCOLA By FRANÇOIS BOURGUIGNON, FRANCISCO H. G. FERREIRA PHILLIPPE G. LEITE. Presented by Luke Okafor and Elizabeth Rivard. OUTLINE. INTRODUCTION BOLSA ESCOLA PROGRAMME METHODOLOGY APPRAISAL OF THE STUDY

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Presented by Luke Okafor and Elizabeth Rivard

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  1. CONDITIONAL CASH TRANSFERS, SCHOOLING AND CHILD LABOR: MICRO-SIMULATING BOLSA ESCOLAByFRANÇOIS BOURGUIGNON, FRANCISCO H. G. FERREIRA PHILLIPPE G. LEITE Presented by Luke Okafor and Elizabeth Rivard University of Warsaw November 19, 2007

  2. OUTLINE • INTRODUCTION • BOLSA ESCOLA PROGRAMME • METHODOLOGY • APPRAISAL OF THE STUDY • SUGGESTIONS FOR IMPROVEMENT • CRITIQUE BY SCHWARTZMAN • CONCLUSIONS University of Warsaw November 19, 2007

  3. INTRODUCTION • Cash transfers targeted to poor people with conditions • The Brazilian National Bolsa Escola is a kind of redistributive programme with features of: -Means-test -The behavioral conditionality -Eligibility criteria • Evaluation of the kind of programme could be: -Ex-post approaches -Ex-ante methods University of Warsaw November 19, 2007

  4. BOLSA ESCOLA PROGRAMME • Bolsa Escola Programme was created by law in April 2001 • Eligibility for participation in the programme -Households with monetary income below 90 Reasi (R$) per month -with children aged 6 to 15 -85 % school attendance • Goals of the programme: -Reduction of current levels of poverty and inequality -Provision of incentives for reduction of future poverty University of Warsaw November 19, 2007

  5. ASSUMPTIONS OF THE STUDY • The decision of how the child’s time allocation is made within the household ignored • The decision to send the child to school is last to made • The issue of various siblings in same household ignored • The composition of the household is exogenous University of Warsaw November 19, 2007

  6. METHODOLOGY • The occupational choice variable Si will be modeled using the standard utility-maximizing interpretation of the multinomial Logit framework, Si = k iff Sk(Ai, Xi, Hi; Y-i + yik) + vik > Sj(Ai, Xi, Hi; Y-i + yij) + vij for j ≠k (1) • Collapse non-income explanatory variables into a single vector Zi and linearize Ui(j) = Sj(Ai, Xi, Hi; Y-i + yij) + vji = Zi.γj + (Y-i + yij)αj + vij (2) University of Warsaw November 19, 2007

  7. METHODOLOGY • The observed marketing earning of the child denoted by wi. Assuming the standard Becker-Mincerian human capital model, writes: Log wi = Xi .δ + m*Ind(Si=1) + ui (3) Xi set of individual characteristics Ui random error terms Ind(Si=1) indicator function Based on (3) the child’s contribution to the household income yij under the various alternatives j University of Warsaw November 19, 2007

  8. METHODOLOGY Yi0 = Kwi; yi1 = MKwi; yi2 =Dyio = DKwi with M = Exp (m) where it is assumed that yij values the output or potential market earnings Wi is decomposed into in the proportions of k, 1-M and 1-D Replacing (4)in (2) leads to Ui(j) = Sj(Ai, Xi, Hi; Y-i + yij) + vji = Zi.γj + Y-i αj + β.wi + vij with: β0 = α0 K, β1= α1 MK; β2= α2 Dk (5) University of Warsaw November 19, 2007

  9. METHODOLOGY • This is the final model simulated by the authors. If the coefficients of α, β, γ, wi and Vij, then the child’s occupational choice type selected by the household I is • K* = Arg Max [ Ui (j)] (6) • Equation (5) is the benchmark case. If the Bolsa Escola programme entitled all the children going to school a transfer of T, then, 5 is replaced by • Ui(j) = Zi.γj + (Y-i + BEij).αj + β.wi + vij with: βEi0 = 0 and BEi1=BEi2 =T (7) University of Warsaw November 19, 2007

  10. APPRAISAL OF THE STUDY • The individual effects could be correlated with schooling choice and the correlation between the composite error terms could make the OLS to be biased • The validation of the simulated model on survey data alone may lead to biased results eg sample bias, age effects etc • Calibrations based on the simulations afterwards may be biased as well University of Warsaw November 19, 2007

  11. APPRAISAL OF THE STUDY CONTD • The eligibility condition created problem of additionality: attendance and learning, a different kind of social exclusion, and length of the programme • Target assistencialist bias Table 1: Bolsa Escola in Recife and Belo Horizonte University of Warsaw November 19, 2007

  12. APPRAISAL OF THE STUDY CONTD • Influence of unemployment in the family • Influence of gender on the decision making process • The problem associated with undeclared income • The scored-based proxy for permanent may be too far from average truth University of Warsaw November 19, 2007

  13. SUGGESTIONS FOR IMPROVEMENT • The use of simulation and CGE may give room for taking care of changing economic conditions in the long run • The labour supply model: the intra-labour choice allocations could be incorporated into the study • Validation and calibration of the model should be based on data from participants and non-participants in the Bolsa Escola programmme and the Survey University of Warsaw November 19, 2007

  14. CONCLUSIONS-ORIGINAL PAPER • Take the size of the family into account when determining which families are eligible • Monitor school attendence rather than school enrollment • The assumption that in poor families, children (ages 6-13) do not go to school because they have to work and little money incentive could change this situation may be too simplistic. University of Warsaw November 19, 2007

  15. CONCLUSIONS-ORIGINAL PAPER • Education focus of the programme (may have missed target) • Target transfer to the age with the highest risk (age 14 and above) University of Warsaw November 19, 2007

  16. CRITIQUE BY SCHWARTZMAN • Patterns of attendance not related to the stipend; limited government monitoring of attendance University of Warsaw November 19, 2007

  17. CRITIQUE BY SCHWARTZMAN • Missing school for work was not widespread University of Warsaw November 19, 2007

  18. CRITIQUE BY SCHWARTZMAN • Having the stipend decreased the chances of a child working for those aged 5-6 and 14-17, but not those aged 7-13 University of Warsaw November 19, 2007

  19. CRITIQUE BY SCHWARTZMAN • Children receiving the stipend actually worked more than those who did not; child labor is mostly rural, ages 15-17 University of Warsaw November 19, 2007

  20. CRITIQUE BY SCHWARTZMAN • The least poor do not always receive the stipend: majority of the poor are urban, but programme focuses on rural poor • Of the 12.8 million children in families at the lowest fifth income quintile, 35% live in rural areas, but receive 40% of the stipends. Among the rural poor, 39% receive the stipend; among the urban poor, only 30% University of Warsaw November 19, 2007

  21. CONCLUSIONS-SCHWARTZMAN • Increase stipend with age (14 and older receive more) • Increase overall quality of schools • Better targeting, implementation and monitoring University of Warsaw November 19, 2007

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