Most Conditional Cash Transfer (CCT) programs seek to both reduce consumption poverty and encourage investments in children’s education and health. Beginning with Mexico’s Oportunidades program, an important feature of CCT programs has been a strong emphasis on credible evaluations of their results.
By examining a number of these evaluations, this 2009 World Bank policy research report finds that by and large, CCT programs have had positive effects on household consumption and on poverty, and have clearly increased school enrollment and use of preventive health services.
CCTs, which provide a steady stream of income, have helped protect poor households from the worst effects of unemployment, illness, and other sudden income shocks.
Impacts on consumption, poverty, and labor market participation
In general, CCTs have raised consumption levels among beneficiaries. This is especially so when transfers are generous, as with Nicaragua’s Red de Protección Social (RPS).
As these transfers tend to be well-targeted to the poor, the effects on consumption have also translated into impacts on poverty. Some of the reductions are fairly large, such as in Nicaragua, where poverty (2002 data) fell by 5 to 9 points.
There is also evidence that CCT programs can affect what people consume. Recipient households tend to spend more on food and on better sources of nutrients than those who don’t receive the transfer but have comparable income or consumption levels.
Concerns that participants might exit the labor force or have more children as a result of receiving cash are not borne out—such effects were absent or very small. For instance, research shows that adults in recipient households in Cambodia, Ecuador and Mexico did not reduce their work effort.
CCTs have led to substantial decreases in child labor, as seen in Brazil, Cambodia, Ecuador, Mexico, and Nicaragua. In Cambodia—an example of a large reduction—the average child receiving the transfer was 10 percentage points less likely to work for pay.
Making cash transfers to women, as CCTs do, may also have increased their bargaining power, itself an important goal in many contexts.
Impacts on education and health outcomes
In country after country, CCTs have led to significant and, in some cases, substantial increases in the use of education and health services.
School enrollment rates have risen among beneficiaries, especially those who had low enrollment rates at the outset. In Cambodia, two pilot programs have reduced the drop-out rate between 6th and 7th grades by 20 to 30 percentage points.
CCT programs can help remove disparities in access to education and health services—an important policy goal. In Pakistan, a CCT program increased the number of 10- to14-year-old girls in school by 11 percentage points, thus helping to reduce the gender gap.
CCT programs have increased the use of preventive health care services in Colombia, Honduras, Mexico, and Nicaragua by between 8 and 33 percentage points. Encouragingly, many of these improvements have been concentrated among the poorest households.
Using services more has not always translated into improved outcomes in health and education. For example, in Cambodia and Mexico higher school enrollment rates have not been matched by better performance in learning tests.
There are various reason why this is so. One possibility is that some important constraints at the household level are not addressed by CCTs as currently designed. These could include poor parenting practices and inadequate information.
Another possibility is that the quality of services is so low, especially for the poor, that increased use alone does not yield large benefits.
To actually reduce child mortality or improve learning, CCTs need to be complemented by higher-quality education and health services and a strong focus on giving children a head start, such as via better nutrition or preschool programs.