Over the past decade, conditional cash transfer (CCT) programs aimed at reducing short- and long-term poverty via transfers conditional on health service and school attendance have been implemented in more than 30 countries worldwide, including the US. Many more similar programs are being planned or piloted. The primary objective of these programs is to generate a sustained decrease in poverty in some of the most disadvantaged regions in their respective countries. Their basic premise is that a major cause of the intergenerational transmission of poverty is the inability of poor households to invest in the human capital of their children. Supply-side interventions, which increase the availability and quality of education and health-care services, for example, are often ineffective in resolving this problem, since the resource constraints facing poor households preclude them from incurring the private costs associated with utilizing these services. CCTs address this problem by targeting transfers to the poorest communities and households, and making the cash transfers conditional, among other things, on beneficiary children attending school and receiving regular preventive health-care. When households fail to fulfill those obligations, they lose their eligibility. By targeting the transfers to poor households, the program alleviates short-term poverty. By linking the transfers to investments in human capital, the program aims to address long-term poverty.
Despite the widespread popularity of CCTs in both developing and developed countries, and the substantial short-term effects they have had on education and health outcomes, there is only limited evidence of their medium- to long-term effects on the human capital and labor market outcomes they target to break the intergenerational transmission of poverty. Moreover, it is not well understood whether gains from such interventions are higher if children benefit at earlier rather than later ages. It is crucial to investigate these questions since evidence on early childhood nutrition and health interventions is mixed as to whether their benefits continue or fade out. Moreover, concerns about low quality schooling and labor market imperfections in many countries where CCTs are implemented make it unclear whether educational gains from these programs actually result in improved learning and labor market outcomes. To date, medium-term evidence is based on research on the CCT program in Mexico and is relatively inconclusive.
This project will determine the effects of the Nicaraguan Conditional Cash Transfer (CCT) program, 10 years after its start. To evaluate the program rigorously, treatment and control localities were randomly assigned to become eligible for program benefits in 2000 and 2003, respectively. The monetary benefits were provided in each of the experimental groups for only 3 years. The study will take advantage of this experimental design to shed light on a number of specific research questions related to the knowledge gaps described above. First, we will examine whether being eligible for the intervention during school years when drop out is most common resulted in differences in schooling, academic achievement, cognitive ability, and labor market outcomes. Second, we will determine if there are differences in cognitive ability and educational achievement between children that were under age 2 when their households were eligible for the program compared to children whose households were eligible only after their second year of life. Third, we will investigate whether the program might have affected important reproductive health indicators. Fourth, we will use quasi-experimental methods to examine the absolute 10-year effect of the program on these same outcomes. To answer these questions rigorously, and in particular to limit selection biases that are common in panel studies, the study design pays special attention to reducing panel attrition through extensive tracking of migrants.
The findings will be of great interest to academics examining the longer term effects of heath, education and nutrition programs as well as social transfer policies in the US and developing countries. Given the widespread popularity of CCT type programs and lack of evidence on medium-term results, the findings also will be of significant policy interest to many national governments, to international development agencies such as the World Bank and Inter-American Development Bank (IADB), and to organizations and agencies interested in early child development and in the long-term effects of improved health and nutrition.