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What Are Conditional Cash Transfers?

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  • Written By: Melissa Barrett
  • Edited By: PJP Schroeder
  • Last Modified Date: 17 September 2016
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Conditional cash transfers (CCTs) are monies that are provided to impoverished families that meet specific program requirements. These programs exist in over 30 countries, including Brazil, Mexico, and Peru. Smaller test programs of this type have been established in areas of the United States and India.

Many people see conditional cash transfers as a substantial improvement in welfare policy. In many cases, the monies provide incentive for parents to take active steps to reduce conditions that cause poverty in the next generation. As a result, countries with CCT programs that are conditional on school enrollment for children have seen dramatic increases in literacy levels and graduation rates. Incidents of child labor have also decreased, sometimes forcing companies to hire adults at competitive wages.

Measurable results have also been recorded with conditional cash transfers that reward parents for improving the health of their children. According to a 2008 paper by the World Bank, children in countries with well-established CCT programs that address nutrition were less likely to suffer growth stunting. These children were healthier than those who did not participate in the program and, as a result, also preformed better in school. It is believed that these children will eventually produce a work pool that is stronger both physically and intellectually.

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CCT programs also appear to reduce infant and maternal death rates. Many of these programs stress prenatal education and medical care. Incentives are generally given to pregnant women who see their physicians regularly and attend nutrition and child care classes.

While these programs produce obvious results, they can be difficult to manage. The World Bank, a large private contributor to these programs, reports that as much as 20 percent of monies allotted to conditional cash transfers must be reserved for administrative costs. In addition, these programs are only effective in areas with adequate health and educational facilities.

Some opponents of conditional cash transfers do not oppose the program directly but take issues with certain requirements. Often, parental choices are substantially influenced by government policy. While it is almost universally agreed that children should be educated and receive health care, these programs often dictate specific choices that are not so widely accepted.

The Brazilian conditional cash transfer program, for example, requires that all children be immunized. Parents with legitimate unease about the safety of vaccines may be pressured to ignore their concerns to receive benefits. Likewise, most CCT programs treat public schooling as the only qualifying educational choice. Those who wish to educate their children at home for religious reasons are generally ineligible for conditional cash transfers.

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