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Inequality and conditionality in cash transfers: Demographic transition and economic development

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  • Kitaura, Koji
  • Miyazawa, Kazutoshi

Abstract

This study examines the effects of conditionality in cash transfers on inequality to alleviate current poverty and reduce its intergenerational transmission. We consider an overlapping generations model with endogenous fertility, where poor households face a trade-off between schooling and child labor. We show that adding conditionality induces a fertility differential increase if the relative wages for child labor are high. When comparing conditional cash transfer programs and unconditional cash transfer programs, our numerical analysis suggests that conditional cash transfer programs promote a take-off from a poverty trap in the short run, but it may worsen income inequality as a whole by increasing the fertility rate of low-income groups.

Suggested Citation

  • Kitaura, Koji & Miyazawa, Kazutoshi, 2021. "Inequality and conditionality in cash transfers: Demographic transition and economic development," Economic Modelling, Elsevier, vol. 94(C), pages 276-287.
  • Handle: RePEc:eee:ecmode:v:94:y:2021:i:c:p:276-287
    DOI: 10.1016/j.econmod.2020.10.008
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    More about this item

    Keywords

    Conditional cash transfer; Child labor; Differential fertility; Inequality;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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