The Future of Conditional Cash Transfer Programs

| April 27, 2013 | 0 Comments

In order to assess the successes and failures of conditional cash transfer programs, it is important to consider the ways in which cash transfers impact health.

One proposal is that, simply put, the additional income of the cash transfers allowed participating families to purchase more or higher quality food, health care services, and other necessitates. They could invest in household improvements, assets, and entrepreneurial activities, or buy books and toys to stimulate child development. It is also possible that participation in the conditional cash transfer program and the cash that comes along with compliance improves the psychological security of family members. This would lead to improved care, support, and nurturing for the children within beneficiary households, and a positive impact on the health of children in these families.

Additionally, cost is often cited as a significant barrier to both nutrition and health care utilization, so providing monetary assistance will work to increase poor families’ abilities to access key services to improve their health. However, it is important to note that there are other barriers to health besides cost which may limit the successes of some conditional cash transfer programs.

Conditional cash transfer programs have generally led to an increase in access to and utilization of health care services of the beneficiary families but this says nothing about the quality of care to which they have access and are able to utilize. Additionally, increased school enrollment and attendance does not necessarily lead to increased learning or higher earned wages. A summary report on conditional cash transfer programs around the world conducted by the World Bank in 2009 has shown that increases in living wage earnings due to supposed improved education are quite small in many programs.[i] If the health care and education beneficiary children are receiving is not high-quality, it will have little effect on future health outcomes. Increased access and increased use alone does not yield the benefits that one might hope or expect to find. Thus, the issue may lie with supply-side infrastructure and inefficiencies if these demands are not being translated into improvements in child health outcomes.

This theory has been tested through cross-sectional studies and random experiments of programs implemented around the globe and was found to have a strong effect in many countries.[ii] [iii]  The most salient supply-side issues identified include geographical inaccessibility to services, a paucity of trained health professionals and teachers, particularly in rural areas, inadequate supplies, and a limited capacity for management, financing, and expansion of health and education services.

These results argue for pairing conditional cash transfer investments with investments to improve the quality of the supply of health and education services to supplement the income redistribution and immediate poverty relief that conditional cash transfers work to combat. Some potential solutions include constructing roads and health centers in rural areas, monetary motivation for rural workers, and improved health care quality through pay-for-performance incentives.

Thankfully, a benefit of conditional cash transfer programs is that they are quite versatile: programs can be tailored to fit the needs of a particular country. In designing conditional cash transfer programs, governments and aid organizations need to first evaluate the health care and educational infrastructure of the country in which to wish to implement their program. If, as is often the case in many low-income and developing countries, these underlying systems are not providing high quality services, perhaps initial investments to improve them would lead to enhanced impacts on the overall health of the country in the long-run.

In looking to the future, it is clear that conditional cash transfer programs have the potential to create lasting improvements in child health outcomes around the globe. Despite the above concerns, conditional cash transfer programs are being found to have positive effects. With slight supply-side adjustments and an understanding of the context that they are initiated in, governments and aid agencies can develop conditional transfer programs that can be successful.

 


[i] Fiszbein A and Schady N. Conditional Cash Transfers: Reducing Present and Future Poverty. The World Bank, Washington, DC.

[ii] Thomas, R. Conditional Cash Transfers to Improve Education and Health. Health Economics, 2012;21:1136-1154.

[iii] Gertler, P. Do Conditional Cash Transfers Improve Child Health? Evidence from PROGRESA’s Control Randomized Experiment. The American Economic Review, 2004;94(2):336-341.

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