J.Cui Development Workshop 1

Reassessing Conditional Cash Transfer Programs

Jinjie Cui (Eric)

Faculty of Economic Science

University of Warsaw

14th January, 2010

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The Planning for today

1. Introduction of conditional cash transfer

2. CCT: the textbook example and rationales

3. Synthesize efficiency and equity for CCT

4. What questions can we raise

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1. Introduction of conditional cash transfer

The use of conditional cash transfer programs as a means of combating poverty. See the case of cash conditional on school attendance in Brazil. (Bolsa Escola Program)

Conditional cash transfer programs can analyze the impacts on household and individual behavior in relation to program aims.

Conditional cash transfers can increase welfare in the society, either by protecting people from their own irrationalities or by providing incentives for them to gather more info.

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Most conditional cash transfer programs are used for essentially one of two purposes: restoring efficiency when externalities exist or improving equity by targeting resources to poor households.

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2. The textbook example and rationales

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1st rationale for CCT programs: they can be used to improve efficiency when there are underlying market failures in the economy.

2nd rationale for CCT programs: relates to equity and redistribution.

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3. Synthesize efficiency and equity for CCT (see Figure 2)

CCT programs can be justified on efficiency grounds to alleviate market failures or on equity grounds to redistribute resources. The choice of the good on which the condition is imposed is crucial. In particular, the extent to which the good is fungible makes a significant difference, depending on the underlying motivation for the program.

The equity and efficiency rationales, while theoretically distinct, exist simultaneously in several conditional cash transfer programs. The extent to which the efficiency and equity objectives result in a tradeoff can be addressed through the condition requirement, the amount of the cash conditionally transferred, and the refinement and enforcement of eligibility criteria.

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4. What questions can we raise?

Can CCT programs truly be an effective tool for poverty alleviation? Why?

Why the political economy plays a vital role for the CCT programs, in what way?

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Source:

Paper: Das,Jishnu; Do, Quy-Toan and Ozler Berk. 2005. “Reassessing Co

nditional Cash Transfer Programs”. The World Bank Research Observer, vol.20, no.1

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Questions???

Thank you for your attention!!!