Conditional or unconditional cash transfers?

While conditional cash transfers (CCT) may lower school dropout rates to a greater extent than unconditional cash transfers (UCT), such a program may have relatively larger adverse effects for the non-compliers in the program. An experimental study in Malawi (Sarah Baird et al. (2011) “Cash or Condition: Evidence from a Randomized Cash Transfer Experiment,” The Quarterly Journal of Economics, 126 (4): pp.1709-1753) found that many of the participants in the CCT program who did not comply – and hence did not receive a cash transfer – became pregnant and married. The results interestingly indicate that the overall impact in terms of lowering pregnancy and marriage rates were greater for the UCT program than for CCT program because of the many non-compliers in the latter.

Simon Hedlin Larsson

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