Conditional cash transfer programmes can have long-term benefits by reducing crime, lowering adolescent fertility and increasing school attendance as well as formal employment.
Conditional cash transfers (CCT) programmes have become a key policy in developing countries for supporting households in poverty and improving their long-run prospects. These programmes have been popular since the 1990s and seek both to mitigate the effects of poverty, and to incentivise households to make choices that improve their future opportunities.
We assess the effects of Familias en Acción (FeA), a Colombian CCT programme, on a broad set of outcomes to identify potential effects beyond the short-run effects previously found on education and poverty (Attanasio et al. 2021). FeA was first implemented in 2002 and was initially targeted to households living in rural areas. In 2007 it was expanded and began to include the poorest households living in urban areas, based on the Sisben score, a proxy-means test implemented in Colombia since the early 1990s. It was also targeted to forcefully displaced households, Afro-Colombians, and indigenous populations. Ultimately, about 20% of the Colombian population was made potentially eligible.
The urban expansion of the programme consisted of two subsidies:
- A monthly transfer of COP 50,000 (US$10.50 currently) per child, for children under seven years of age in 2009, aimed at covering the basic health and nutrition needs of targeted children.
- A monthly transfer of between COP 15,000 and COP 40,000 (depending on the school grade attended) per child between seven and 17 years of age in 2009, designed to promote school attendance.
The transfers were targeted to the female household head, typically the mother of the children. The transfers were conditional on children under seven attending regular health check-ups and children seven and older attending at least 80% of school classes.
We use administrative records from Medellín to assess the long-term effects of the 2007 expansion of the FeA programme on crime, teenage pregnancy, secondary school dropout rates, access to higher education, formal employment, and access to credit from formal financial institutions.
Our empirical strategy exploits the assignment rule of the programme, which defines eligible households as those scoring 11 or less in the Sisben-II. As shown by Attanasio et al. (2021). This scenario is well suited to a regression discontinuity approach (Thistlethwaite and Campbell 1960, Imbens and Lemieux 2008), in particular, one based on a fuzzy design (Van der Klaauw 2002, Hahn et al. 2001), which involves comparing those just above and below this eligibility threshold, irrespective of whether they actually obtained benefits. Our study uses this approach to present evidence of the long-term effects of the programme on crime, adolescent fertility, and school attendance. In ongoing work, we are complementing this with evidence on the effects on formal employment and credit from formal financial institutions.
Effect of programme on crime, adolescent fertility, and school attendance
This empirical strategy allows us to estimate the effects of being eligible for this programme on crime, adolescent fertility, and school attendance:
- Eligibility for the programme reduces the arrest rate (our measure of crime) by 2.7 percentage points from a base of 6.2% for the control group.
- Teen pregnancy declines by 2.3 percentage points from a control mean of 8.4%.
- School dropout rates decline by 5.8 percentage points for both men and women.
- For men, the programme caused a 1.7 percentage point increase in tertiary education enrolment rates but had no effect on tertiary enrolment for women.
We also estimate the effects of FeA on the probability of being formally employed and the probability of having a consumption credit or a credit card with a formal regulated financial institution – a signal of financial inclusion:
- The programme increases formal employment rates for men whose family was eligible for the programme by 3.4 percentage points from a base of 46.1% for the control group.
- There is no significant effect of the programme on formality rates for women.
- Treated women are 3.4 percentage points more likely to have received consumption credit in a formal financial institution, from a control mean of 27%, while it didn’t affect their access to credit cards.
- FeA did not significantly affect the access to either consumption credit or credit cards for men.
Our results here are consistent with those found by Cardona-Sosa et al. (2017), who find that FeA increases the likelihood of members of beneficiary households of having a credit with a formal financial institution by 3.5 percentage points.
It is worth noting that in 2007 coverage of the programme was limited because government budgetary constraints prevented many eligible people from actually receiving the cash. Thus, the effect of being eligible, as we estimate above, masks large impacts for the actual recipients, which we estimate to be 3.5 times larger than the intention to treat effects reported above.
Implications for policymaking
Our study presents evidence that conditional cash transfer programmes, beyond their standard poverty alleviation role, have important long-term impacts on crime, informality and financial inclusion for the younger generation. Our findings reaffirm the importance of well-designed social programmes: they offer much-needed support to families in need whilst providing longer term beneficial effects to the children growing up in these families.
Attanasio, O, L Cardona-Sosa, C Medina, C Meghir and C M Posso-Suárez (2021), “Long Term Effects of Cash Transfer Programs in Colombia,” NBER Working Papers 29056.
Cardona-Sosa, L, C Medina and J Nuñez (2017), “Impacto de las Transferencias Condicionadas sobre el Mercado de Crédito: El caso de Familias en Acción en Colombia,” Borradores de Economia 995, Banco de la Republica de Colombia.
Hahn, J, P E Todd and W van der Klaauw (2001), “Identification and Estimation of Treatment Effects with a Regression–Discontinuity Design”, Econometrica 69: 201–209.
Imbens, G W and T Lemieux (2008), “The regression discontinuity design — theory and applications”, Journal of Econometrics 142(2): 611-614.
Thistlewaite, D and D Campbell (1960), “Regression Discontinuity Analysis: An Alternative to an ex-post facto experiment”, Journal of Educational Psychology 51: 309-317.
Van der Klaauw, W (2002), “Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach”, International Economic Review 43(4): 1249-1287.