Beyond the Income Effect : Impacts of Conditional Cash Transfer Programs on Private Investments in Human Capital
In the past decade, conditional cash transfer (CCT) programs have become an important component of social policy in developing countries. While the impacts of these programs have been well researched with respect to their effectiveness to achieve i...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/05/19520425/beyond-income-effect-impacts-conditional-cash-transfer-programs-private-investments-human-capital http://hdl.handle.net/10986/18807 |
| Summary: | In the past decade, conditional cash
transfer (CCT) programs have become an important component
of social policy in developing countries. While the impacts
of these programs have been well researched with respect to
their effectiveness to achieve intended outcomes, less is
known about their impact on private expenditure decisions.
This aspect has great policy relevance since changes in
private household expenditures can either support or
counteract the aim of the programs. This essay investigates
the impact of a CCT program on private household expenditure
decisions in nutrition, health and education which are seen
as principal contributors to child human capital. First,
household expenditure behavior under a CCT program is
discussed based on Heckman's model on the technology of
skill formation as a conceptual framework. The paper shows
how intra-household preferences and perceptions on the
substitutability or complementarity of investments can
impact household resource allocation decisions.
Subsequently, the theoretical implications are tested in the
context of the Brazilian CCT program Bolsa Família, using
the Brazilian household expenditure survey. Evidence is
found that households increase their private expenditure in
food and education disproportionally to the amount of cash
transfer, that is, more than would be expected when
considering the Engel curves of the expenditures under question. |
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