Demand and Supply-Side Determinants of Conditional Cash Transfer Program Effectiveness

Summary

The Programa Nacional de Becas Estudiantiles is a conditional cash transfer program designed to promote human capital accumulation and reduce poverty among Argentine youth. This study follows a 1999 cohort of students for five years and uses matching methods with a comparison group of students excluded due to quotas to estimate average and marginal program impacts. Multilevel methods are used to explore the role of program management and execution in explaining variation between schools in student outcomes. The results suggest that the Becas program improved students’ attendance and performance, in part through program conditions requiring good attendance and academic progress for continued scholarship receipt.

Introduction

Conditional cash transfer programs are currently an important economic and social policy tool being used to address the problems of poverty, inequality, and human capital development in both developing and developed countries. A primary objective of conditional cash transfer programs is to provide short-term assistance to families in poverty, while at the same time promoting investments in long-term human capital development through conditions on benefit receipt. Other important goals of these programs include income redistribution and the promotion of social inclusion. The coverage of these programs is vast in some countries; for example, Brazil’s Bolsa Famı´lia program that began in 2003 is expected to serve up to 50 million poor persons.

Early evaluations of conditional cash transfer programs have reported some positive effects. The proxy means tests that are used in many programs to prioritize access to benefits appear to be effective in targeting the poor, and the electronic transfers of cash are more efficient (lower transaction costs) and less distortive (fewer errors of inclusion and price distortions) than in-kind transfers and general subsidies (Rawlings, 2004). Experimental and nonexperimental evaluations of these programs have also reported positive impacts on school enrollment rates, consumption levels, immunization and nutrition monitoring, and reductions in child labor. In a number of countries, these programs are now being expanded, and “second-generation” models are being implemented and evaluated, including studies of the role that conditions play in increasing family welfare (Martinelli and Parker, 2001, Rawlings & Rubio, 2003).

Another way in which thinking about conditional cash transfer programs is advancing is the greater attention that is now being given to the important aspects of program implementation. A primary challenge to successful program implementation has been limited institutional capacity and resources for basic program management responsibilities, including the registration of beneficiaries, regular and timely benefit transfers, monitoring of compliance with program conditions, recordkeeping, and the prevention of fraud and mismanagement of program funds (Tabor, 2002). In large countries like Argentina and Brazil, programs are administered at the municipal level, with local government, school and health authorities playing key roles.

This research focuses on Argentina’s Programa Nacional de Becas Estudiantiles, a conditional cash transfer program that targets youth aged 13–19 years, who are entering their eighth and ninth years of study in public schools and are at risk of leaving school before completing their education. The primary objectives of the program are to support the retention, promotion, and graduation of students from the third cycle of the Educacion General Basica (EGB)—equivalent to the high school years (i.e., grades 9–12)—thus increasing educational attainment and promoting human capital development among Argentine youth. The Becas program currently provides scholarships to approximately 350 000 economically vulnerable students each year in the form of bi-annual payments to their families.

In this study, nonexperimental analyses are used to assess the impact of Argentina’s Becas program on students’ educational attainment and performance in school. The impact of the treatment on the treated is estimated for two different groups: Becas program beneficiaries compared to eligible students who received no scholarship and Becas program beneficiaries who received the scholarship for only one year compared to those who received the scholarship for two or more years (the marginal program impact). In addition, the analysis goes one step further to explore school-level factors, including characteristics of the schools and the students attending them and various aspects of the Becas program implementation, and their role in explaining the variation in Becas program impacts between schools. Thus, this research aims to contribute to our understanding of both the demand- and supply-side determinants of the effectiveness of a large-scale conditional cash transfer program.

This study finds significant impacts of the Becas program in increasing students’ attendance, reducing grade repetition and improving students’ performance in school. The Becas program also appeared to establish important dynamic incentive effects by linking receipt of the scholarship in subsequent years to students’ academic performance in the first year of participation. In addition, student performance was higher in schools with greater institutional capacity, better conditions for learning, and superior management.

In the next section, additional background information on conditional cash transfer programs is provided, and findings from recent evaluations are briefly described, followed by discussion of the motivation for a focus on Argentina’s human capital development initiatives and the Becas Estudiantiles program. The methodology for this study, samples, and data are described next, and then the empirical analyses and study findings are presented. The paper concludes with a discussion of the study findings and implications for future human capital development programs of this type.