Conditional Cash Transfer (CCT) programs aim to reduce poverty by making welfare programs conditional upon the receivers' actions. That is, the government only transfers the money to persons who meet certain criteria.

These criteria may include enrolling children into public schools, getting regular check-ups at the doctor's office, receiving vaccinations, or the like. They have been hailed as a way of reducing inequality and helping households break out of a vicious cycle whereby poverty is transmitted from one generation to another.

Do these and other claims make sense? Are they supported by the available empirical evidence? This volume seeks to answer these and other related questions. Specifically, it lays out a conceptual framework for thinking about the economic rationale for CCTs; it reviews the very rich evidence that has accumulated on CCTs,; it discusses how the conceptual framework and the evidence on impacts should inform the design of CCT programs in practice; and it discusses how CCTs fit in the context of broader social policies.

The authors show that there is considerable evidence that CCTs have improved the lives of poor people and argue that conditional cash transfers have been an effective way of redistributing income to the poor.

They also recognize that even the best-designed and managed CCT cannot fulfill all of the needs of a comprehensive social protection system. They therefore need to be complemented with other interventions, such as workfare or employment programs, and social pensions.

"If we are serious about tackling poverty, we must get serious about trying new things. Conditional cash transfer programs have proven effective in countries across the globe and New York is proud to be the first American city to experiment with the innovative idea.

This book provides an up-to-date assessment of CCT programs based on impact evaluations studies from across the world. We look forward to adding our evaluation results to an important body of research, and continuing our work with partners worldwide to reach our shared goal of breaking cycles of intergenerational poverty."

-Mayor Michael R. Bloomberg
Mayor, New York City

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Ariel Fiszbein and Norbert Schady
with
Francisco H.G. Ferreira,
Margaret Grosh, Niall Keleher,
Pedro Olinto, and Emmanuel Skoufias

©2009 The International Bank for Reconstruction and Development / The World Bank
1818 H Street NW
Washington DC 20433
Telephone: 202-473-1000
Internet: www.worldbank.org

CONTENTS
Foreword xi
Acknowledgments xv
Acronyms xvii
Overview 1
The CCT Wave 3
The Arguments for CCTs 8
The Impacts of CCT Programs 11
Policy and Design Options 22
Complementary Interventions 24
CCTs in the Context of Social Protection Policies 26
Conclusion 27
1. Introduction 29
The CCT Wave 31
Theme and Variations 34
Outline of the Report and Issues Covered 40
2. The Economic Rationale for Conditional Cash Transfers 45
Cash Transfers: Arguments in Support and Against 46
The Microfoundations of Paternalism 51
A Political Economy Argument 59
Social Efficiency Arguments 64
Conclusion 65
3. Design and Implementation Features of CCT Programs 67 Targeting in Practice 67
Benefit Systems 80
Conditions: Their Defi nition, Compliance Monitoring, and Enforcement 86
Monitoring and Evaluation 91
Intersectoral and Interinstitutional Challenges 97
Conclusion 100
4. The Impact of CCTs on Consumption Poverty and Employment 103
Impact of CCTs on Household Consumption and Poverty 104
Analyzing Offsetting Behavioral Responses to CCTs 114
Long-Term Impacts of CCTs on Consumption 123
Conclusion 124
5. The Impact of CCT Programs on the Accumulation of Human Capital 127
CCT Program Effects on the Use of Education and Health Services 128
Impact of CCTs on “Final” Outcomes in Education and Health 141
Cash, Behavioral Changes, and Outcomes 155
Conclusion 160
6. CCTs: Policy and Design Options 165
When Is a CCT Program the Right Policy Instrument? 166
Designing an Efficient CCT Program 172
Adapting the Supply of Social Services 186
CCT Programs As Components of Social Protection Systems 195
Conclusion 200

FORWARD
THE POTENTIAL IMPACT OF THE GLOBAL FINANCIAL CRISIS OF 2008 on living standards in the developing world has given renewed emphasis to the importance of social safety net programs.

The right policies can be a smart investment in an uncertain world. This report reviews the evidence on conditional cash transfers (CCTs)—safety net programs that have become popular in developing countries over the last decade. It concludes that CCTs generally have been successful in reducing poverty and encouraging parents to invest in the health and education of their children.

The CCT programs studied in the report span a range of low- and middle-income countries; large and small programs; and those that work at local, regional, and national levels. Although there are important differences between countries and regions in how CCTs are used, they all share one defi ning characteristic: they transfer cash while asking benefi ciaries to make prespecifi ed investments in child education and health. ...

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