Conditional Cash Transfers

Conditional Cash Transfers can be an effective social program that helps to alleviate poverty. They provide discretionary money that can pay for both the direct and opportunity costs of education, which include books and supplies, as well as lost income of child labor. It has been argued that 21 percent of the reduction in the GINI coefficient in Mexico and Brazil is due to CCTs (Soares et al. 218). Other studies in Brazil indicate that the dropout rate was decreased from 10 to 0.4 percent, while employment of children between ten and fourteen fell by just over 30 percent (Franko 516). These statistics are immediate measures of the success of CCTs; however, the most important measures of these programs’ success—indicators that would show that CCTs broke the intergenerational poverty cycle, such as dropout and graduation rates of the children whose grandparents are now receiving cash benefits to keep their future parents in school—will not be available for decades. Nevertheless, the statistics available now show much promise.

Furthermore, the theory behind CCTs is sound. It is very much a capabilities approach to poverty alleviation and addresses future foundations for growth. Money is not the end measurement, it is the means to an end, with the “end” here being investment in human capital via education. However, there are issues with the program; since it addresses future foundations for growth, it does not address adults in poverty now. Nor does it address how these families will survive once the children have graduated and the family no longer receives the subsidies they may have come to depend on.

Source:
Franko, Patrice M. The Puzzle of Latin American Economic Development. Lanham: Rowman & Littlefield, 2007. Print.
Soares, Sergio, Rafael Guerreiro Osório, Fabio Veras Soares, Marcelo Medeiros, and Eduardo Zepeda. "Conditional Cash Transfers in Brazil, Chile, and Mexico: Impacts upon Equality." Carnegie Endowment Fund. Web. 5 May 2012.