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Conditional Cash Transfers in Brazil, Chile and Mexico

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Conditional Cash Transfers in Brazil, Chile and Mexico overtyINTERNATIONAL Centre P Working Paper number 35 April, 2007 The International Poverty Centre is jointly supported by the Brazilian Institute for Applied Economic Research (IPEA) and the Bureau for Development Policy, United Nations Development Programme, New York. CONDITIONAL CASH TRANSFERS IN BRAZIL, CHILE AND MEXICO: IMPACTS UPON INEQUALITY Sergei Soares Institute of Applied Economic Research, IPEA and Rafael Guerreiro Osório Fábio Veras Soares Marcelo Medeiros Eduardo Zepeda International Poverty Centre Working Paper Working Copyright© 2007 International Poverty Centre United Nations Development Programme International Poverty Centre SBS – Ed. BNDES,10o andar 70076 900 Brasilia DF Brazil [email protected] www.undp-povertycentre.org Telephone +55 61 2105 5000 Fax +55 61 2105 5001 Rights and Permissions All rights reserved. The text and data in this publication may be reproduced as long as the source is cited. Reproductions for commercial purposes are forbidden. The International Poverty Centre’s Working Papers disseminate the findings of its work in progress to encourage the exchange of ideas about major development issues. The papers are signed by the authors and should be cited and referred to accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Poverty Centre, IPEA or the United Nations Development Programme (or its Administrator, Directors, or the countries they represent). Working Papers are available online at http://www.undp-povertycentre.org and subscriptions can be requested by email to [email protected] Print ISSN: 1812-108X CONDITIONAL CASH TRANSFERS IN BRAZIL, CHILE AND M EXICO: IM PACTS U PON INEQ U ALITY * Sergei Soares; ** Rafael G uerreiro O sório;*** Fábio Veras Soares;*** Marcelo Medeiros *** and Eduardo Zepeda*** ABSTRACT This or!ing "aper deco# poses changes in $he G ini coefficien$ in order $o in%es$iga$e & he$her 'ondi$ional 'ash Transfers (''T) ha%e had an ine*uali$+ reducing effec$ in $hree ,a$in -# erican coun$ries. /ra0il1 Me2ico and 'hile3 4$s $echni*ue is $he deco# posi$ion of $he G ini coefficien$ b+ fac$or co# ponen$s3 4$s # ain finding is $ha$ ''T progra# # es helped reduce ine*uali$+ be$& een $he # id56778s and roughl+ $he # id59888s3 The share of $o$al inco# e represen$ed b+ $he ''Ts has been %er+ s# all. abou$ 83: per cen$ in Me2ico and /ra0il and a %er+ s# all 8386 per cen$ in 'hile3 /u$ since $heir $arge$ing has been ou$s$anding1 $heir e*uali0ing i# pac$ & as responsible for abou$ 96 per cen$ of $he fall in bo$h $he /ra0ilian and $he Me2ican G ini inde21 each of & hich fell b+ appro2i# a$el+ 93; poin$s during $he period $ha$ $his paper re%ie& ed3 4n 'hile $he effec$ & as responsible for a 6: per cen$ reduc$ion in ine*uali$+1 al$hough $he $o$al reduc$ion in ine*uali$+ & as %er+ # odes$. a # ere 836 G ini poin$3 The difference & as due $o $he s# all si0e of $he 'hilean progra# # e rela$i%e $o $he larger Me2ican and /ra0ilian progra# # es3 <e+& ords. 4nco# e = is$ribu$ion; 'ondi$ional 'ash Transfers3 >E, 'lassifica$ion. = ?6 * The au$hors are gra$eful $o 'arlos Salas1 "rofessor a$ 'olegio Tla2cala1 Me2ico1 for ser%ing as $he e2$ernal peer re%ie& er of $his & or!ing paper and Terr+ Mc<inle+1 -c$ing = irec$or of 4"'1 for ser%ing as $he in$ernal peer re%ie& er3 e also & an$ $o $han! Rafael Ribas for e2cellen$ sugges$ions $ha$ enhanced $he *uali$+ of our anal+sis3 ** 4ns$i$u$e of -pplied Econo# ic Research1 4"E-3 *** 4n$erna$ional "o%er$+ 'en$re1 4"'@A B = "3 2 4n$erna$ional "o%er$+ 'en$re or!ing "aper nC ?: 1 INTRODU CTION 'ondi$ional cash $ransfer (''T) progra# # es in ,a$in -# erica are increasingl+ appealing $o bo$h go%ern# en$s1 & hich are an2ious $o do so# e$hing effec$i%e bu$ are facing difficul$ fiscal cons$rain$s1 and # ul$ila$eral and bila$eral coopera$ion agencies1 & hich are an2ious $o rid $he# sel%es of $he s$ig# a of cu# berso# e bureaucracies & hose & or! has had li$$le i# pac$ upon $he poor3 A nli!e so# e o$her social progra# # es1 ''Ts ha%e sho& n effec$i%eness in reaching # an+ of $heir obDec$i%es according $o $he resul$s of rigorous process and i# pac$ e%alua$ions3 Ee$1 i$ # igh$ s$ill be $oo earl+ $o Dudge $heir long5$er# i# pac$ on de%elop# en$3 The li$era$ure on ''T e%alua$ions is rich. i$ no$es significan$ i# pac$s upon schooling1 heal$h1 infan$ # or$ali$+1 child labour1 and po%er$+36 ,i!e o$her progra# # es1 ''Ts ha%e co# e $o genera$e e2pec$a$ions in areas & here $he+ & ere no$ e2plici$l+ in$ended $o ha%e i# pac$s1 al$hough perhaps such i# pac$s should ha%e been an$icipa$ed3 O ne of $hese is $he chronicall+ high and long5las$ing ine*uali$+ $ha$ plagues ,a$in -# erica3 Much has been & ri$$en on $he co# # on his$orical origins of high ,a$in -# erican ine*uali$+ and i$s increasingl+ nega$i%e conse*uences on econo# ic perfor# ance39 The region & as coloni0ed b+ Spanish and "or$uguese cro& ns $ha$ ins$alled F$he ins$i$u$ions of plunderG fore# os$ a# ong & hich & ere -frican sla%er+ and 4ndigenous ser%i$ude3 These ins$i$u$ions lef$ a legac+ $ha$ has ha# pered $he region since decoloni0a$ion3 Man+ au$hors argue $ha$ un$il ine*uali$+ is ade*ua$el+ addressed1 ,a$in -# erica & ill be conde# ned $o re# ain a pos$5colonial bac!& a$er & i$h li$$le $o con$ribu$e $o $he global econo# +3 This1 of course1 # a!es $he unin$ended role of ''Ts in figh$ing ine*uali$+ possibl+ # ore i# por$an$ $han # an+ of i$s in$ended obDec$i%es3 A nli!e o$her his$orical periods1 & hen $here & as considerable s+nchronici$+ a# ong ,a$in -# erican coun$ries %is5H5%is de%elop# en$ s$ra$egies1 gro& $h pa$$erns1 and dis$ribu$ional resul$s1 recen$ decades ha%e been charac$eri0ed b+ # ore idios+ncra$ic $rends3 hile 'hile1 Me2ico1 and /ra0il all successfull+ adop$ed i# por$ subs$i$u$ion indus$riali0a$ion in $he 67I8s1 since 67;J $heir $raDec$ories ha%e been differen$3 4n 'hile1 $here has been re# ar!able gro& $h bu$ gro& ing ine*uali$+ based upon an open econo# + s$ra$eg+ highl+ dependen$ upon a fe& produc$s3 4n Me2ico1 $here has been reasonable gro& $h and falling ine*uali$+ based upon a # ore recen$ opening of $he econo# +1 & i$h e2por$s ranging o%er a di%ersi$+ of produc$s bu$ hea%il+ dependen$ upon a single $rading par$ner and based on a high i# por$ con$en$3 4n /ra0il1 $here has been $rade liberali0a$ion along & i$h di%ersifica$ion of e2por$s and i# por$s1 poor gro& $h bu$ falling ine*uali$+3 G i%en $his he$erogenei$+ of $rends in $he e%olu$ion of $he pri# ar+ inco# e dis$ribu$ion in such coun$ries1 ''Ts appear $o be one of $he fe& reliable polic+ ins$ru# en$s $o reduce ine*uali$+ fro# $he Rio /ra%o $o Tierra del Fuego3 O ur obDec$i%e in $his or!ing "aper is $o use a si# ple deco# posi$ion # e$hodolog+ $o shed so# e ligh$ on $he record of ''Ts in reducing ine*uali$+ in $hree # aDor ,a$in - # erican coun$ries3 e hope $ha$ $he resul$s & ill also illu# ina$e polic+ anal+sis in o$her coun$ries of $he region3 Sergei Soares; Rafael G uerreiro O sório; Fábio Veras Soares; Marcelo Medeiros and Eduardo Zepeda 3 2 HOW CONDITIONAL CASH TRANSFER PROG RAM M ES W ORK /elo& & e de$ail so# e of $he his$or+ of ''T progra# s in /ra0il1 'hile and Me2ico and indica$e ho& $he+ ha%e & or!ed3 Thereaf$er1 & e proceed $o address issues of da$a and # e$hodolog+3 936 /R-Z4,. TK E /O ,S- F-ML,4- /efore O c$ober 988?1 /ra0il had four Federal ''T progra# # es in place3 The firs$1 crea$ed in 677I1 & as $he Program a de Erradicação do Trabalho Infantil (PETI)1 & hich1 as indica$ed b+ i$s na# e1 ai# ed a$ $he eradica$ion of child labour3 This & as a highl+ $arge$ed cash $ransfer1 gi%en for children aged ; $o 6: +ears1 & or!ing (or prone $o & or!) in ha0ardous and degrading ac$i%i$ies3 4$ pro%ided RM 9: (M ?; """)? for children in rural areas and RM J8 (M :7 """) for children in urban areas and a supple# en$ ear# ar!ed for # unicipali$ies $o increase schooling hours $o occup+ $he en$ire da+ $hrough $he crea$ion of af$er5school ac$i%i$ies !no& n as Jornada Am pliada3 4$s condi$ionali$+ s$ipula$ed a co# # i$# en$ $ha$ children +ounger $han 6I +ears of age & ould no$ & or! and & ould # ain$ain ;: per cen$ a$$endance in school3 The Social -ssis$ance Secre$aria$ (of $he Federal G o%ern# en$) ran PETI3 4n 98861 ano$her ''T1 $he Federal Bolsa Escola progra# # e1 & as crea$ed3 4$s condi$ionali$+ s$ipula$ed school a$$endance for school5age children (i3e31 I56: +ears old) in fa# ilies & hose per capita inco# e & as belo& RM 78 (M 7; """)3 The $ransfer & as RM 6: (M 6I """) per child1 up $o a # a2i# u# of RM J: (M J7 """) and $he progra# # e & as ad# inis$ered b+ $he Minis$r+ of Educa$ion3 The $hird ''T progra# # e & as $he Bolsa Alim entação1 & hose condi$ionali$+ s$ipula$ed # edical chec!5ups for pregnan$ & o# en1 breas$ feeding for # o$hers1 and i# # uni0a$ion of +oung children3 The $ransfer & as RM 6: (M 6I """) per child up $o si2 +ears of age1 up $o a # a2i# u# of RM J: (M J7 """)1 and $he progra# # e & as run b+ $he Minis$r+ of K eal$h3 4n 988?1 a four$h ''T progra# # e1 $he Cartão Alim entação1 & as crea$ed1 & i$h a $ransfer of RM :8 (M :J """) for fa# ilies & i$h # on$hl+ per capita inco# e belo& half of $he # ini# u# & age3 The $ransfer & as $o las$ for si2 # on$hs1 and in%ol%ed a condi$ionali$+ $ha$ $he funds had $o be spen$ on food3 Each of $hese progra# # es had i$s o& n financing1 i# ple# en$ing agenc+1 condi$ionali$+ and infor# a$ion s+s$e# 3J -s $heir con$rol s+s$e# s did no$ e2change infor# a$ion1 one fa# il+ could recei%e all four $ransfers & hile ano$her1 e*uall+
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