This report seeks to bring together existing knowledge about CCTs.
Starting with the Mexican program Oportunidades, an important fea-ture of CCT programs has been the strong emphasis they have placed on credible evaluations of their impact on various outcomes. The report draws heavily on those evaluations, and expands on earlier efforts to assess the performance of CCT programs using evidence from impact evaluations (see Das, Do, and Özler 2005; Rawlings and Rubio 2004).
Indeed, it would not have been possible to write this report without the efforts of the programs themselves, international donors, and academics around the world to ensure the high quality of many of the evaluations.
(See appendix B for further discussion of CCT impact evaluations.)
The accumulating evidence of positive impacts has been instru-mental both in sustaining existing programs and in encouraging the establishment of similar programs in other developing countries.3 Nevertheless, although the initial group of evaluations provided solid evidence of impact along several key dimensions, important policy and operational questions remain. First, much of what is known about CCTs is based on evaluations of programs in Latin America, especially Mexico. It is not clear, therefore, whether CCTs could be expected to have similar impacts in other settings, especially in countries that are signifi cantly poorer and that tend to have weaker institutions. Although much of the evidence discussed in this report is based on studies of Latin American programs, we have made a special effort to discuss the evidence from countries in other regions, especially programs in Bangladesh and Cambodia.
Second, as CCT programs have become larger—in several countries they represent a substantial share of public budgets dedicated to poverty reduction—demand for evidence on their results has grown beyond the initial emphasis on a small number of outcomes. For example, policy makers and academics increasingly are focusing on possible long-term effects of the transfers, as well as on changes in “fi nal” outcomes (say, learning rather than school enrollment, or nutritional status rather than frequency of growth monitoring checkups). This report pays particular attention to these outcomes, which have been discussed less extensively in the literature on CCTs.
Third, the fact that CCT programs are being implemented in very diverse country settings raises many questions regarding their design:
the role of conditions, the appropriate means of targeting, the right size of the transfer, and the best way to coordinate CCT programs with the supply of services are just a few of the important questions being asked.
Again, we make special efforts to analyze the possible importance of these features of program design in explaining changes in outcomes, and to consider carefully the appropriate role of a CCT within a coun-try’s social assistance system (although that is a complex agenda that goes beyond the goals of this report).
The rest of the report proceeds as follows. Chapter 2 provides a conceptual framework in which to think about CCTs. The chapter focuses particularly on when it makes sense to condition transfers on household investments in child human capital. It discusses three broad sets of circumstances under which CCTs are likely to be particularly
attractive. The fi rst set of circumstances is a case in which parents invest less in the human capital of their children than is warranted by the pri-vate returns to those investments. That situation might happen because parents value their own welfare more than that of their children; are poorly informed about the returns to investments in education, health, and nutrition; or are myopic and discount the future very heavily. In the second set of circumstances, there are externalities to human capital investments, as might be true if there are spillovers from having a better-educated or more healthy population that are not taken into account by rational individuals when they make decisions about investments. The third set of circumstances is one in which there are political economy considerations that justify imposing conditions on transfers, as might be the case, for example, when it is easier to sustain a budget for a program if transfers are perceived not as a handout but as a quid pro quo whereby a government gives households cash if—and only if—these households act “responsibly” and invest in their children.
Following that conceptual discussion, chapter 3 describes in detail how CCT programs work. Virtually all CCT programs have attempted to direct their benefi ts to the poor so the chapter begins with a discus-sion of the targeting instruments used in different programs. It then describes the benefi t systems, including who receives the payment, how payment takes place, and what payment levels are in practice. The chap-ter continues by describing how programs have monitored conditions and the extent to which households are penalized for noncompliance.
The fi nal two sections of the chapter discuss the importance of monitor-ing and evaluation and how CCTs have coordinated with other actors in the social sectors.
Redistribution of resources to the poor is one of the two funda-mental goals of most CCT programs, and chapter 4 presents the evi-dence of CCT impact on consumption poverty. The chapter discusses the impacts in the short term and, for two countries (Mexico and Nicaragua), in the medium term. Many policy makers originally had concerns that the effects of CCTs on household consumption would be relatively small as households made offsetting adjustments. As the chapter discusses, however, those adjustments—in terms of reductions in adult labor supply, in remittances, or in household access to other social programs—have been modest. As a result, the impact of CCTs on consumption poverty is largely determined (at least in the short run) by the size of the transfer and the extent to which programs effectively can ensure that the cash reaches poor households.
The second fundamental goal of CCTs is to encourage households to invest in the human capital of their children. Chapter 5 turns to the evidence on the impact that CCTs have had on outcomes in education, health, and nutrition. The chapter begins by showing that CCTs have had signifi cant effects on the use of education and health services, and that those effects often have been substantial in magnitude. It then dis-cusses the evidence of CCT effects on “fi nal” outcomes in education and health. The chapter shows that the evidence on the impact of CCTs on these outcomes is somewhat mixed. Thus, CCTs appear to have had a modest impact on years of schooling completed by adults; they reduced the incidence of low child height for age in some countries and among some populations but not others; and they had little effect on learning outcomes among either school-age children or adults. Addressing those shortcomings is likely to require a combination of efforts: redefi ning conditions, perhaps including incentives for performance, not only service use; improving the quality of the supply of services; and comple-menting CCTs with interventions that help households overcome other barriers to adequate child nutrition, development, and learning. The chapter closes by discussing whether CCT program impacts that are observed are the result of the “income” effect associated with the trans-fer or the “price” effect that results from the conditions.
Chapter 6, the fi nal chapter of the report, returns to the conceptual framework presented in chapter 2. In particular, with the evidence from chapters 4 and 5 in hand, it discusses when CCT programs are likely to be the right policy instrument. It then turns to a discussion of how CCT programs should be designed—for example, in terms of the population covered, the conditions that are monitored, and the magnitude of the transfer. The chapter closes by considering where CCTs fi t in the context of social policies. An important message of the chapter is that CCTs have shown themselves to be effective and versatile programs. However, they are most likely to be effective in stimulating investments in child human capital and in providing a social safety net when they work closely with other programs. The chapter reviews some of the ongoing efforts by developing countries in this area. It also argues that there are other interventions—workfare or employment programs, pensions—that need to complement even the designed and best-managed CCT.