Conditional Cash Transfers and the Equity-Efficiency Debate
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...
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/04/3573068/conditional-cash-transfers-equity-efficiency-debate http://hdl.handle.net/10986/14299 |
| Summary: | 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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