IDEAS home Printed from https://ideas.repec.org/p/apc/wpaper/2014-025.html
   My bibliography  Save this paper

General Equilibrium Analysis of Conditional Cash Transfers

Author

Listed:
  • Nikita Céspedes

    (Banco Central de Reserva del Perú)

Abstract

Conditional Cash Transfer (CCT) program is one of the most important anti-poverty policies worldwide. In this document, I study the economic effects of this program by using a stylized dynamic general equilibrium model. I look at the program’s impact on output, human capital, poverty and income inequality. I also study its welfare implications and its effects on the intergenerational transmission of poverty. The quantitative analysis reveals that a long-term implementation of this anti-poverty program helps to reduce the intergenerational transmission of poverty. In aggregate terms the welfare gain is small, but varies across agents; the winners are those who are in the lower tail of the income distribution and the losers are those located in the upper tail. Finally, this program increases the human capital of households and, through this channel, induces a consistent reduction of both poverty and income inequality.

Suggested Citation

  • Nikita Céspedes, 2014. "General Equilibrium Analysis of Conditional Cash Transfers," Working Papers 25, Peruvian Economic Association.
    • Handle: RePEc:apc:wpaper:2014-025
    as

    Download full text from publisher

    File URL: http://perueconomics.org/wp-content/uploads/2014/01/WP-25.pdf
    File Function: Application/pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Coady & Margaret Grosh & John Hoddinott, 2004. "Targeting of Transfers in Developing Countries : Review of Lessons and Experience," World Bank Publications - Books, The World Bank Group, number 14902, April.
    2. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    3. Diego Restuccia & Carlos Urrutia, 2004. "Intergenerational Persistence of Earnings: The Role of Early and College Education," American Economic Review, American Economic Association, vol. 94(5), pages 1354-1378, December.
    4. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    5. Tauchen, George, 1986. "Finite state markov-chain approximations to univariate and vector autoregressions," Economics Letters, Elsevier, vol. 20(2), pages 177-181.
    6. Coady, David & Harris, Rebecca Lee, 2001. "A regional general equilibrium analysis of the welfare impact of cash transfers: an analysis of PROGRESA in Mexico," TMD discussion papers 76, International Food Policy Research Institute (IFPRI).
    7. Samuel Freije & Rosangela Bando & Fernanda Arce, 2006. "Conditional Transfers, Labor Supply, and Poverty: Microsimulating Oportunidades," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2006), pages 73-124, August.
    8. Unknown, 1986. "Letters," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 1(4), pages 1-9.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eric A. Hanushek & Charles Ka Yui Leung & Kuzey Yilmaz, 2014. "Borrowing Constraints, College Aid, and Intergenerational Mobility," Journal of Human Capital, University of Chicago Press, vol. 8(1), pages 1-41.
    2. Andrés Erosa & Tatyana Koreshkova & Diego Restuccia, 2010. "How Important Is Human Capital? A Quantitative Theory Assessment of World Income Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1421-1449.
    3. Marcel Peruffo & Pedro Cavalcanti Ferreira, 2017. "The Long-Term Effects Of Conditional Cash Transfers On Child Labor And School Enrollment," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 2008-2030, October.
    4. William Blankenau & Xiaoyan Youderian, 2015. "Early childhood education expenditures and the intergenerational persistence of income," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(2), pages 334-349, April.
    5. Hans A. Holter, 2015. "Accounting for cross‐country differences in intergenerational earnings persistence: The impact of taxation and public education expenditure," Quantitative Economics, Econometric Society, vol. 6(2), pages 385-428, July.
    6. Ferreira, Pedro Cavalcanti & Santos, Marcelo Rodrigues dos, 2008. "The effect of social security, demography and technology on retirement," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 683, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    7. Manuel Toledo, 2006. "On the Intergenerational Persistence of Work Hours," 2006 Meeting Papers 226, Society for Economic Dynamics.
    8. Joao Ramos & Bernard Herskovic, 2017. "Promoting Educational Opportunities: Long-run Implications of Affirmative Action in College Admissions," 2017 Meeting Papers 1552, Society for Economic Dynamics.
    9. Andres Erosa & Tatyana Koreshkova & Diego Restuccia, 2006. "On the aggregate and distributional implications of productivity differences across countries," Working Paper 06-02, Federal Reserve Bank of Richmond.
    10. Kuzey Yilmaz, 2014. "On the Importance of Fertility Behavior in School Finance Policy Design," Koç University-TUSIAD Economic Research Forum Working Papers 1403, Koc University-TUSIAD Economic Research Forum.
    11. Alejandro Badel, 2010. "Understanding permanent black-white earnings inequality," Working Papers 2010-047, Federal Reserve Bank of St. Louis.
    12. O'Gorman, Melanie, 2010. "Educational disparity and the persistence of the black-white wage gap in the U.S," Economics of Education Review, Elsevier, vol. 29(4), pages 526-542, August.
    13. Francisco J. Buera & Yongseok Shin, 2013. "Financial Frictions and the Persistence of History: A Quantitative Exploration," Journal of Political Economy, University of Chicago Press, vol. 121(2), pages 221-272.
    14. Fabio Kanczuk & Laura Alfaro, 2012. "Carry Trade and Exchange Rate Regimes," Working Papers, Department of Economics 2012_05, University of São Paulo (FEA-USP).
    15. Julio Dávila & Jay H. Hong & Per Krusell & José‐Víctor Ríos‐Rull, 2012. "Constrained Efficiency in the Neoclassical Growth Model With Uninsurable Idiosyncratic Shocks," Econometrica, Econometric Society, vol. 80(6), pages 2431-2467, November.
    16. Stanislav Anatolyev & Andrey Vasnev, 2002. "Markov chain approximation in bootstrapping autoregressions," Economics Bulletin, AccessEcon, vol. 3(19), pages 1-8.
    17. Lopez-Martin, Bernabe & Leal, Julio & Martinez Fritscher, Andre, 2019. "Commodity price risk management and fiscal policy in a sovereign default model," Journal of International Money and Finance, Elsevier, vol. 96(C), pages 304-323.
    18. Laczó, Sarolta & Rossi, Raffaele, 2020. "Time-consistent consumption taxation," Journal of Monetary Economics, Elsevier, vol. 114(C), pages 194-220.
    19. Aiyagari, S. Rao & McGrattan, Ellen R., 1998. "The optimum quantity of debt," Journal of Monetary Economics, Elsevier, vol. 42(3), pages 447-469, October.
    20. Nakashima, Kiyotaka & Ogawa, Toshiaki, 2020. "The Impacts of Strengthening Regulatory Surveillance on Bank Behavior: A Dynamic Analysis from Incomplete to Complete Enforcement of Capital Regulation in Microprudential Policy," MPRA Paper 99938, University Library of Munich, Germany.

    More about this item

    Keywords

    Poverty; Welfare; Cash Transfer; General Equilibrium; Inequality; Overlapping Generations;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:apc:wpaper:2014-025. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nelson Ramírez-Rondán (email available below). General contact details of provider: https://edirc.repec.org/data/peruvea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.