DP11937 Are Conditional Cash Transfers Fulfilling Their Promise? Schooling, Learning, and Earnings After 10 Years

Author(s): Tania Barham, Karen Macours, John Maluccio
Publication Date: March 2017
Keyword(s): CCT, education, labor markets, learning, long-term effects
JEL(s): I25, I28, I38, O12
Programme Areas: Development Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11937

Interventions aimed at improving the nutrition, health, and education of young children are often motivated by their potential to break the intergenerational transmission of poverty. A prominent example, conditional cash transfers (CCTs), has become the anti-poverty program of choice in many developing countries. Evidence is inconclusive as to whether the demonstrated short-term gains translate into the longer-term educational and labor market benefits needed to fully justify them. This paper uses the randomized phase-in of a 3-year CCT program in Nicaragua to estimate long-term effects. We estimate these effects using experimental variation, complemented by two alternative non-experimental identification strategies. We focus on boys aged 9-12 years at the start of the program who, due to the program's eligibility criteria and prior school dropout patterns, were more likely to have been exposed to the program in the early treatment than in the late treatment group. Previously demonstrated short-term increases in schooling are sustained after 10 years, and there are substantial gains in learning. These improvements in human capital coincide with positive labor market returns - the young men are more likely to engage in wage work, migrate temporarily for better paying jobs, and have higher earnings. In Nicaragua, schooling and learning gains hence translate into earning gains for these young men, implying important long-term returns to CCT programs.