Cash Transfer Evaluation

Conditional cash transfers (CCTs) pay households on the condition that they undertake specified behaviours — typically sending children to school and attending health check-ups — while unconditional cash transfers (UCTs) impose no such requirements. CCTs aim to build human capital and overcome behavioural or informational barriers, but carry monitoring and exclusion costs. Evidence such as Baird, McIntosh, and Özler (2011) shows conditions can raise schooling more than pure cash, while UCTs may better protect the most vulnerable who fail conditions; the optimal choice depends on objectives and capacity.

Many transfer programmes assign eligibility using a continuous proxy-means score with a sharp cutoff: households below a poverty threshold qualify, those above do not. Families just on either side of the cutoff are nearly identical in characteristics, so comparing their outcomes isolates the causal effect of the transfer locally at the threshold. The design requires that the score cannot be precisely manipulated around the cutoff, a condition that can be tested by examining the density of the running variable.

A large body of evidence finds little support for the fear that transfers reduce adult labour supply or create dependency; reviews of multiple programmes (including a well-known multi-country study) show no systematic reduction in work among working-age adults, with reductions concentrated among the elderly and child labour. Recipients commonly invest part of transfers in productive assets and businesses. Concerns about local price inflation and spillovers are more empirically grounded and are increasingly addressed with saturation-design evaluations.