The Targeting Benefit of Conditional Cash Transfers
Conditional cash transfers (CCTs) are a popular type of social welfare program that make payments to households conditional on human capital investments in children. Compared to unconditional cash transfers (UCTs), CCTs may exclude some low-income...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/401581578321660452/The-Targeting-Benefit-of-Conditional-Cash-Transfers http://hdl.handle.net/10986/33150 |
| Summary: | Conditional cash transfers (CCTs) are a
popular type of social welfare program that make payments to
households conditional on human capital investments in
children. Compared to unconditional cash transfers (UCTs),
CCTs may exclude some low-income households as access is
tied to normal investments in children. This paper argues
that conditionalities on children's school enrollment
offer an unexplored targeting benefit over UCTs: CCTs target
money to households that forgo a discrete amount of child
income. This paper shows that the size of this targeting
benefit is directly related to the distribution of parental
incomes, the size of forgone child incomes, and two
elasticities already popular in the literature: the income
effect of a UCT and the price effect of a CCT. These
elasticities are estimated for a large CCT program in rural
Mexico, Progresa, using variation in transfers to younger
siblings to identify income effects. In this setting, the
analysis finds that the targeting benefit is almost as large
as the cost of excluding some low-income households; this
implies that 41 percent of the Progresa budget should go to
a CCT over a UCT based on targeting grounds alone. |
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