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Conditional cash transfers and the equity-efficiency debate

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  • Das, Jishnu
  • Quy-Toan Do
  • Ozler, Berk

Abstract

During the past decade, the use of conditional cash transfers to increase investment in human capital has generated considerable excitement in both research and policy forums. Such schemes are being increasingly adopted in a number of contexts and countries to improve outcomes in health, education, and child labor as they aim to balance the goals of current and future poverty reduction. In this paper, the authors define any scheme requiring a specified course of action in order to receive a benefit as a conditional cash transfer. This definition includes cash transfers based on human capital investments, but is sufficiently broad to encompass other schemes such as work-fare programs or consumption transfers. The authors examine the rationales behind, the problems with, and the tradeoffs inherent to conditional cash transfer programs. They discuss two main concerns: low participation and fungibility. Low participation refers to the problem of program uptake. If individuals do not participate in the program, whether it was designed to increase human capital investment or to target resources, the program will not be successful. The problem of fungibility, however, depends on the rationale for the particular conditional cash transfer program. When used to increase efficiency,even when program uptake is high, program effects may be less than envisioned due to behavioral responses of households that lead to changes in the consumption of close substitutes. While researchers have typically addressed these issues separately, the authors emphasize the need for policymakers to incorporate a number of different factors in a comprehensive framework to design optimal conditional cash transfer schemes.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3280.

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Date of creation: 01 Apr 2004
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Handle: RePEc:wbk:wbrwps:3280

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Keywords: Early Child and Children's Health; Gender and Health; Montreal Protocol; Chemical&Petrochemical Industry; Roads&Highways;

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Citations

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Cited by:
  1. Rawlings, Laura B., 2004. "A new approach to social assistance : Latin America's experience with conditional cash transfer programs," Social Protection Discussion Papers 30165, The World Bank.
  2. Aber, Lawrence & Rawlings, Laura B., 2011. "North-South knowledgesharing on incentive-based conditional cash transfer programs," Social Protection Discussion Papers 59565, The World Bank.
  3. Kanbur, Ravi, 2009. "Poverty and Distribution: Twenty Years Ago and Now," Working Papers 48918, Cornell University, Department of Applied Economics and Management.
  4. Kalie Pauw & Liberty Mncube, 2007. "Expanding the Social Security Net in South Africa: Opportunities, Challenges and Constraints," Working Papers 07127, University of Cape Town, Development Policy Research Unit.
  5. César P. Bouillon & Luis Tejerina, 2006. "Do We Know What Works?: A Systematic Review of Impact Evaluations of Social Programs in Latin America and the Caribbean," IDB Publications 23598, Inter-American Development Bank.
  6. Rodríguez, Luis C. & Pascual, Unai & Muradian, Roldan & Pazmino, Nathalie & Whitten, Stuart, 2011. "Towards a unified scheme for environmental and social protection: Learning from PES and CCT experiences in developing countries," Ecological Economics, Elsevier, vol. 70(11), pages 2163-2174, September.
  7. Buys, Piet & Deichmann, Uwe & Wheeler, David, 2006. "Road network upgrading and overland trade expansion in Sub-Saharan Africa," Policy Research Working Paper Series 4097, The World Bank.

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