Conditional Cash Transfer Programs: Experiences & Prospects

1. Conditional Cash Transfer Programs: Experiences & Prospects Emmanuel Skoufias IADB

2. CCT programs in Perspective • Objectives: Max Social Welfare • Instruments: Programs that redistribute income • Constraints: • Economic (fixed budget) • Social • Political

3. Dual Objectives of CCT • Long-run poverty alleviation through investment in human capital (i.e., education, health and nutrition) • Short-run effect on poverty through cash transfers

4. Means used to achieve CCT objectives • (Better) Targeting • Simultaneous intervention in 3 key sectors (synergy) • Conditioning cash transfers to regular school attendance and visits to health centers • Cash transfers given to mothers • Parallel support on Supply Side (schools & health centers)

7. Why Evaluate Programs? • Economic Reasons • Improve design and effectiveness of program evaluated • Comparing program impacts allows G to reallocate funds from less to more effective programs and thus to an increase in Social Welfare • Social Reasons (increases accountability) • Political Reasons • Credibility/break with “bad” practices of past/chances of re-election

8. Key elements of a successful and rigorous evaluation • Evaluation built-in as a component of the program early in the program design stages • Evaluation has clear objectives • Impact? • Program Design? e.g. PROGRESA package • Evaluation has political support • Evaluation Design that yields credible estimates of Impact

9. Key elements of a successful and rigorous evaluation • Log frame helps identify subject to the budget constraint available (agreed) upon • objectives • setting indicators of impact • data needs (quantitative and qualitative) • the threshold value of the CHANGE in impact indicator if a program HAS an effect • Survey sizes needed • Budget allocated to the evaluation

10. Evaluation Design • Evaluation Designs differ in how they construct/ comparison/control group • Experimental (Most credible but full of obstacles) • Quasi-experimental: B&A, Matching Method, RDD • Non-experimental: Instrumental variable methods

11. PROGRESA: Evaluation Design • EXPERIMENTAL DESIGN: Program randomized at the locality level • Sample of 506 localities – 186 control (no PROGRESA) – 320 treatment (PROGRESA) • 24, 077 Households (hh) • 78% beneficiaries • Can use Double Difference Estimator to evaluate impact

12. Treatment E (Y) 2DIF impact estimate Before & After impact estimate (no controls) Control Before After

13. Evaluation Tools Formal surveys (Semi)-structured observations and interviews Focus groups with stakeholders (beneficiaries, local leaders, local PROGRESA officials, doctors, nurses, school teachers, promotoras)

14. PROGRESA Evaluation Surveys/Data

15. PROGRESA Evaluation Surveys Additional Info Sources School & clinic survey School and clinic administrative data Nutrition survey conducted independently by Min. of Health and INSP Student achievement test scores by Min of Education Record of payments distributed to beneficiary households

16. Topics of PROGRESA’s Evaluation Targeting accuracy and impact on poverty School enrollment, attendance, child labor, achievement scores Health and utilization of health facilities Child Nutrition Household Consumption & Nutrition

17. Topics of PROGRESA’s Evaluation cont’d Operation of the program and perceptions of stakeholders Cost-Analysis and Cost Effectiveness Status of women, community relations Adult labor supply, intrahousehold transfers

18. Evaluation Results-Targeting • Geographic targeting of the program in rural areas is good • Method of selecting poor households within localities is generally accurate (undercoverage of 7% ) • PROGRESA’s targeting decreases the poverty gap P(1) by 30% and the severity of poverty P(2) by 45%

19. NOTE: Program Operation & Impact • Linkage between program operation & implementation & “estimated” program impact • Delays in Benefit Distribution • Mistakes in lists of Beneficiaries • Intention to Treat Effect vs Treatment Effect on those who actually received treatment

20. Education • Are more children attending school because of PROGRESA? • How much can schooling be expected to increase? • Are there more cost effective ways of bringing children to school? • Does PROGRESA have more impact in certain grades? • Any effects on drop-out rates, grade progression, repetition, reentry?

25. Evaluation Results: Education • PROGRESA has a positive effect the school attendance of both boys and girls in primary and secondary school • Boys in secondary: increase by 8 % • Girls in secondary: increase by 14% • Negative impact on children’s labor market participation (especially boys) • No observed increase in the attendance rate of children in school. • PROGRESA increases overall educational attainment by 10% (and 8% higher earnings)

26. Evaluation Results: Education • Program effective in keeping children in school especially during the critical transition from primary to secondary • Less effective in bringing back to and keeping in school children who were out. • Earlier entry ages, less grade repetition, better grade progression • PROGRESA more cost-effective than increasing access to junior secondary education

27. Cost Analysis • Are the administrative costs of PROGRESA high? • What are the private costs associated with participation in the program? • What might be the indirect effects of the program on the national economy? (e.g. financing of the program)?

28. Evaluation Results: Cost Analysis • For every 100 pesos allocated to the program, 8.2 pesos are administration/program costs. • Very low compared to LICONSA (40 pesos per 100 pesos) and TORTIVALES (14 pesos per 100) • Targeting and conditioning of the program makeup 56% of program costs (4.6 pesos out of 8.2 pesos) • Private costs (3.8 pesos out of 8.2 pesos)

29. Evaluation Results: Cost Analysis • Eliminating distortionary food subsidies and using funds to finance a program like PROGRESA leads to substantial welfare gains.

30. Critical Issues to be Resolved: • Do CCT programs break the intergenerational transmission of poverty? Need long time-series • Is Conditioning necessary? • What if give unconditional cash transfers? • What is the minimal CCT that may be paid?

31. On the effects of a CCT • CCT=Restricted income-related transfer • Receive transfer ONLY IF have 85% attendance rate • Enrollment vs attendance (conditional on enrollment) • Effect of CCT will differ depending on initial attendance rate (initial distance from attendance requirement)

32. The Effect of a Conditional Cash Transfer on Child School Attendance and Work

33. On the Effects of a CCT • There is a minimum cash transfer required to induce S>=85% • If S>=85% income effect on attendance rate • If S<85% income effect and substitution effects reinforce each other • Early drop-outs go back to schoolexpect large effects on enrollment (initially)

34. Critical Issues to be Resolved: • Impact on Children’s Achievement & Learning? • Do CCT increase achievement or induce teachers to lower grade-passing standards? • Teacher & health worker incentives • Quality of Services

35. Critical Issues to be Resolved: • Do CCT generate Program/Welfare Dependency? • So far no negative incentive effects on adult work • Transfers & Income generation • Do/Can CCT programs fulfill role of safety net at times of crises? • Lack built-in flexibility to expand coverage to households falling below poverty during crisis

36. Final Issue • Long-Run Sustainability of Program Budget & Political Economy of Program Support

37. Research Department Inter-American Development Bank

38. Additional Background

45. Health • Does it increase visits to public health clinics? • Does PROGRESA have an effect on child health? • On the health of adults?

48. Evaluation results: Health • Significant increase in visit rates in PROGRESA communities • Increasing in nutrition monitoring visits, immunization rates and prenatal care in 1st trimester (8% increase) • No substitution between private and public facilities

49. Evaluation results: Health • 12% lower incidence of illness in children between ages 0-5. • Significantly positive effects on adult health

50. Nutrition • Does PROGRESA impact of child growth? • Household consumption and food diet?