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The long-term effects of conditional cash transfers on child labor and school enrollment

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  • Ferreira, Pedro Cavalcanti
  • Peruffo, Marcel Cortes

Abstract

This paper investigates the long-term e ects of conditional cash transfers on school attainment and child labor. To this end, we construct a dynamic heterogeneous agent model, calibrate it with Brazilian data, and introduce a policy similar to the Brazilian Bolsa Fam lia. Our results suggest that this type of policy has a very strong impact on educational outcomes, sharply increasing primary school completion. The conditional transfer is also able to reduce the share of working children from 22% to 17%. We then compute the transition to the new steady state and show that the program actually increases child labor over the short run, because the transfer is not enough to completely cover the schooling costs, so children have to work to be able to comply with the program's schooling eligibility requirement. We also evaluate the impacts on poverty, inequality, and welfare.

Suggested Citation

  • Ferreira, Pedro Cavalcanti & Peruffo, Marcel Cortes, 2015. "The long-term effects of conditional cash transfers on child labor and school enrollment," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 769, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  • Handle: RePEc:fgv:epgewp:769
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    1. Andrés Erosa & Tatyana Koreshkova & Diego Restuccia, 2010. "How Important Is Human Capital? A Quantitative Theory Assessment of World Income Inequality," Review of Economic Studies, Oxford University Press, vol. 77(4), pages 1421-1449.
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    4. Guilherme Lichand, 2010. "Decomposing the Effects of CCTs on Entrepreneurship," World Bank Other Operational Studies 10143, The World Bank.
    5. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications, The World Bank, number 2597.
    6. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-427, June.
    7. Lichand, Guilherme, 2010. "Decomposing the Effects of CCTs on Entrepreneurship," World Bank - Economic Premise, The World Bank, issue 41, pages 1-4, November.
    8. Lichand, Guilherme, 2010. "Decomposing the effects of CCTs on entrepreneurship," Policy Research Working Paper Series 5457, The World Bank.
    9. Dunn Christopher E, 2007. "The Intergenerational Transmission of Lifetime Earnings: Evidence from Brazil," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-42, October.
    10. FranÁois Bourguignon & Francisco H. G. Ferreira & Phillippe G. Leite, 2003. "Conditional Cash Transfers, Schooling, and Child Labor: Micro-Simulating Brazil's Bolsa Escola Program," World Bank Economic Review, World Bank Group, vol. 17(2), pages 229-254, December.
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