François Bourguignon

Francisco H. G. Ferreira

Phillippe G. Leite

Cash transfers targeted to poor people, but conditional on some behavior on their part--such as school attendance or regular visits to health care facilities--are being adopted in a growing number of developing countries. Even where ex-post impact evaluations have been conducted, a number of policy-relevant counterfactual questions have remained unanswered. These are questions about the potential impact of changes in program design--such as benefit levels or the choice of the means-test--on both the current welfare and the behavioral response of household members. Bourguignon, Ferreira, and Leite propose a method to simulate the effects of those alternative program designs on welfare and behavior based on microeconometrically estimated models of household behavior. In an application to Brazil's recently introduced federal Bolsa Escola program, the authors find a surprisingly strong effect of the conditionality on school attendance, but a muted impact of the transfers on the reduction of poverty and inequality levels. This paper--a product of the Poverty Team, Development Research Group--is part of a larger effort in the group to understand the impact of policies on the distribution of incomes.

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