Safety Net for the Poor The Role of Conditional Cash Grant Programs. Guilherme Luis Sedlacek OVE October 31th., 2003

Context While most 7-14 years olds are in school. Learning outcomes have not improved over the past decade Primary and basic education completion rates remain low. Poor children often drop out of school to work by age 16.

Context 80% of children ages 7-14 working are also in school. CL increases current family income. But school performance suffers: –lag behind their peers in school. –are less likely to complete primary cycle. –have lower learning outcomes. –are less likely to enter the secondary cycle.

The impacts are beyond lower education outcomes Those in the worst forms of child labor suffer permanent welfare losses: health, violence, cognitive development, drug trade, etc. –Examples: sugar cane and sisal (rural), street vendors, prostitution and drug trade (urban). However, the vulnerability of the child needs to be viewed in the context of the vulnerability of the family.

Possible Solutions Cash-grant strategies: Preventive programs: broadly targeted to poor children, grants conditional on school attendance, visit to clinics, etc. –Bolsa Escola, Progresa Remedial programs: narrowly targeted programs seeking to mitigate the specific risk identified. –PETI, PRAF, RED

Different Programs with Distinct Objectives Superficially alike, the programs differ: The low proportion of working children and the lack of enforcement of conditionalities means that Bolsa Escola/Progresa type programs are unlikely to reduce child labor. Furthermore, the design of these programs does not restrict children from working. In contrast, the enforcement of conditionalities under PETI - through the after-school program - increases changes of success. PRAF and RED also more likely to have an impact given the narrower target group.

Evaluations Confirm Expected Impacts Recent Evaluations of the Programs reveal: The impact of Bolsa Escola/Progresa on child- labor is small, these programs are more likely to keep children in school and increase attendance. Progresa increased the transition from primary to secondary and improved health outcomes. Evaluations of the PETI reveals that it was effective in reducing the number of children working, and schooling indicators. Red improved health and education outcomes.

Lessons Learned (1) Level of cash-grant should be related to forgone earnings. Enforcement of conditionalities (by teachers?). The labor market opportunities for the graduates of the programs. Availability of inputs in the supply side. How to mitigate vulnerability at the family level.

Lessons Learned (2) Institute cost-effective targeting and monitoring instruments. Involve local institutional stakeholders: education, health, etc Local NGOs and civil society can help ensure governance and sustainability.

Conclusions (1) Some confusion about program objectives persist at the conceptual level and need to be clarified. Preventive programs need to be distinguished from Remedial programs. The link between supply and demand should be strengthened (after-school programs, nutrition, availability of facilities, staff and supplies) Programs to distinguish child work in the home, in the market, and those that fall under the worse forms. Policy responses are distinct.

Conclusions (2) PETI success can be directly related to the government prioritizing CL eradication. But, key policy parameters remain to be set: –Optimal level of the transfers and impact on the financial sustainability. Adjusting for the earnings foregone as CL increases with age. –Value added by the conditionality. –How to avoid perverse disincentive effects. –How to avoid migration and demographic impacts.