Conditional cash transfer
Conditional cash transfer programs aim to reduce poverty by making cash transfers conditional upon the receivers' actions. The government only transfers the money to persons who meet certain criteria. These criteria may include enrolling children into public schools, getting regular check-ups at the doctor's office, receiving vaccinations, or the like. CCTs seek to help the current generation in poverty, as well as breaking the cycle of poverty for the next through the development of human capital. Conditional cash transfers could help reduce feminization of poverty.
Effectiveness
Short-term
Few development initiatives have been evaluated as rigorously as CCT programs. The implementation of conditional cash transfer programs has been accompanied by systematic efforts to measure their effectiveness and understand their broader impact on household behavior, a marked departure from the limited attention that was paid to rigorous impact evaluations in the past. Evaluation results are available for PROGRESA in Mexico, PETI in Brazil and the Atención a Crisis in Nicaragua. These evaluations reveal that conditional cash transfers can provide effective incentives for investing in the poor's human capital. A 2015 analysis by staff at Argentina's National Scientific and Technical Research Council estimated that the Universal Allocation per Child programme had increased school attendance for children between the ages of 15 and 17 by 3.9 percent.CCTs have affected not only the overall level of consumption, but also the composition of consumption. There is evidence that households that receive CCTs spend more on food and, in the food basket, on higher-quality sources of nutrients than do households that do not receive the transfer but have comparable overall income or consumption levels.
In Bangladesh, Pakistan, and Turkey, where school enrollment rates among girls were lower than among boys, CCTs have helped reduce this gender gap.
CCTs have resulted in sizeable reductions in poverty among recipients—especially when the transfer has been sufficient, well targeted, and structured in a way that does not discourage recipients from taking other actions to escape poverty. Because CCTs provide a steady income, they have helped protect poor households from the worst effects of unemployment, catastrophic illness, and other sudden income shocks. And making cash transfers to women, as virtually all CCTs do, may have increased their bargaining power.
In the US, a paper by the Institute for Research on Poverty concluded in 2011:
Over time, we find that expenditures have shifted toward the disabled and the elderly, and away from those with the lowest incomes and toward those with higher incomes, with the consequence that post-transfer rates of deep poverty for some groups have increased. We conclude that the U.S. benefit system is paternalistic and tilted toward the support of the employed and toward groups with special needs and perceived deservingness.
A 2022 study in the Quarterly Journal of Economics found that CCT to newborns increased their educational outcomes and young adult earnings. The economic impact was large enough that "the transfer pays for itself through subsequent increases in federal income tax revenue".
Long-term Effects
Beyond the short-term effects of accessing cash, increasing consumption, schooling, and health expenditure, etc. CCTs also have long-term effects in different areas. Researchers have investigated how CCT affects households in the long term in terms of These studies examine whether early exposure to CCTs strengthens households’ ability to overcome future shocks and improves adult socioeconomic pathways. Additionally, CCT also improves these households’ . It generates positive spillover effects for the next generation. Lastly, CCT deeply benefits these households with positive health and demographic complementary effects.Economic resilience of CCT
A study in 2025 used administrative data from Ecuador’s Human Development Grant to track children with CCT into childhood, examining how prior exposure to the CCT influenced their education level, household income, and economic resilience during the COVID-19 pandemic. The study found that there are no robust effects across the entire sample, but it indicates that for these rural children exposed to CCT, the program increases 5-10 percentage points during COVID-19. This implies that the CCT improves the economic resilience of these households in the event of an economic shock in the future.Intergenerational Spillover Effects of CCTs
Other studies focus on intergenerational mobility. Research across Latin America suggests that the children of CCT beneficiaries are more likely to enter and remain in school, even after their households leave the program. The research suggests that increasing educational attainment is associated with a reduction in intergenerational poverty among CCTs. CCTs enhance human capital accumulation across generations, leading to increased employment opportunities and improved economic stability in the future. Additionally, these children can gain cognitive skills, social skills, higher employment, and income in the future. Therefore, households receiving CCT can benefit their children in the future by gaining different skills and increasing the employment rate, which is a way of intergenerational spillover effects.Health and Demographic Complementary Effects of CCTs
CCT has a long-term effect on increasing household spending on food and health care, especially for children. There are long-term improvements in childhood nutrition and health. This prevents children from suffering the diseases caused by malnutrition, such as lower stunting rates and higher adult height.Furthermore, households exposed to CCT display a lower fertility rate for infants and neonates. A study from Barham focuses on Mexico’s Progresa, which is one of the largest CCT programs in the world. They compared the different outcomes for these households after receiving CCT. The indices are the mortality rate for infants and neonates. The research resulted in a 11% decline in the infant mortality rate for the treatment group. And a 2% decline in the neonate mortality rate, even though it is smaller than the 11%, is still significant. The mechanisms behind this are that cash enables households to afford better nutrition and health support. They can access various foods to ingest enough nutrients and support health clinic visits.
Medical applications
Modest financial incentives delivered in routine clinical practice have been found to significantly improve adherence to, and completion of, vaccination programmes.Digitalization of CCT
In recent years, many CCT programs have employed digital payment systems to improve efficiency, reduce mistakes, and expand access for beneficiaries. There are some mobile money platforms, such as Kenya’s M-Pesa and India’s Aadhaar, that have enabled governments to transfer directly to verified recipients and minimize administrative delays. In a 2021 World Bank evaluation, it found that digital transfers in CCT reduced transaction costs by up to 40% and increased the reliability of payment delivery in rural areas.The COVID-19 pandemic further accelerated the digitalization of CCT. Countries including Brazil, the Philippines, and Indonesia introduced emergency cash transfers, allowing for rapid coverage to these new vulnerable populations. Studies from 2020–2022 show that households receiving digital CCT were more likely to maintain school attendance and access health services than households relying on traditional in-person collection systems.
Despite these advantages, there are still some challenges, such as limited internet access, digital illiteracy, and inconsistent biological identification systems, to restrict the coverage of digital CCTs in low-income regions.
Difficulties
Although the benefits of conditional cash transfer programs across the world have been widely noted, there remains a series of obstacles to their success that have caused some programs to be stunted or terminated completely.External factors
According to a comprehensive study done by senior research analysts Laura Rawlings and Gloria Rubio of the World Bank, the beginning stages of program implementation present the challenge of creating a reliable implementation schedule. On many occasions, changes in political leadership, natural disasters, or changes in program administration have delayed the implementation schedule and lead to decreased efficiency or program termination.An example of the negative outcomes of one such delay is provided by the UN Development Programme's in-depth study of the short-lived Nicaragua's Social Protection Network. According to the study, the movement of the program administration to the country's Ministry of the Family caused a delay in efficiency and resources that, among other factors, led to the program's termination. Delays can also be caused by difficulties in developing the program management information system.
One such delay in Mexico's Oportunidades program caused 27% of its targeted population not to receive any transfers after two years of implementation.
In addition to unscheduled delays, other external factors that can hinder a CCT's success pertain to unexpected financial crisis. According to a comprehensive assessment provided by the World Bank, the structure of conditional cash transfer programs has not yet been adjusted to retain success in the event of a large financial crisis.
Primarily, conditional cash transfer programs are not flexible enough to extend benefits to households that fall into the program's targeted population only during economic downturns. Thus, those not normally covered by the program's benefits may be harder hit than those who are but will not be able to be assisted.