Conditional cash transfers (CCT) are increasingly prevalent social assistance programs in low and middle-income countries, benefiting over 110 million people in Latin America alone. These programs have demonstrably helped lift many families out of poverty and have improved short-term educational, nutritional and health outcomes of millions of children worldwide (Fiszbein and Schady, 2009).
Our knowledge of the impacts of CCTs, however, is mostly restricted to outcomes measured in the short run. That is to say, we don’t know much about whether these programs have impacts in the long run. We also don’t know much about how such long run impacts—to the extent that there are any—may be mediated by program design features. CCTs are complex programs and many decisions—typically made by in-country officials—determine their final shape and size. Some of these decisions include how much to pay families, how and when to pay them, how stringent the conditions for compliance should be and who is eligible to participate. Some evidence suggests that program design choices may affect the extent to which CCTs improve short-term outcomes (Barrera-Osorio, Bertrand, Linden and Perez-Calle, 2011; Baird, McIntosh and Ozler; Fizbein and Schady, 2009; Saavedra and Garcia, 2013).
In a recent Harvard University working paper, myself and co-authors Felipe Barrera-Osorio (Harvard Graduate School of Education) and Leigh Linden (University of Texas at Austin) investigate using a Randomized Controlled Trial research design the long-term educational impacts of CCTs up to eight years after initial transfer receipt. The paper is also the first to document effects on tertiary enrollment and how these long-term impacts may vary with program design features. An appealing feature of the research design is that these program design features were randomly assigned across project sites, enabling credible causal comparisons of long-term outcomes across the different program conditions.
Researchers compared three different payment structures relative to a control group that, even after eight years, receives no transfer. The first payment structure was a standard CCT payment that provided a fixed transfer every two months conditional on secondary school enrollment and continued school attendance. In the second payment structure, families were forced to save about one-third of their stipend until the start of the following school year. In the third payment structure, families also received a monetary incentive for secondary school graduation and post-secondary enrollment.
We find that traditional payments and the payment structure that forces families to save a portion of the stipend affect long-term educational outcomes. However, unlike traditional payments, forcing families to save a portion of their stipend induces students to enroll in college at higher rates than students in the control condition. Perhaps unsurprisingly, providing monetary incentives for high-school graduation and college enrollment also induces students to enroll in college relative to students in the control condition.
One possible interpretation of the study’s results is that low-income families have difficulty saving to pay for future educational outlays. This may be particularly true in the transition to college, which for many families is a considerable expense. The results in this working paper provide policy-relevant insight on possible avenues in which the design of CCTs can be cost-effectively improved.
The views and opinions expressed in this blog post are those of the author alone, and do not necessarily represent those of the authors of the papers described here.