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The World Bank Economic Review Advance Access originally published online on February 1, 2006
The World Bank Economic Review 2006 20(1):1-29; doi:10.1093/wber/lhj002
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© The Author 2006. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org.

Making Conditional Cash Transfer Programs More Efficient: Designing for Maximum Effect of the Conditionality

Alain de Janvry and Elisabeth Sadoulet

Alain de Janvry and Elisabeth Sadoulet are professors in the Department of Agricultural and Resource Economics at the University of California at Berkeley. Their e-mail addresses are alain{at}are.berkeley.edu and sadoulet{at}are.berkeley.edu.

Conditional cash transfer programs are now used extensively to encourage poor parents to increase investments in their children’s human capital. These programs can be large and expensive, motivating a quest for greater efficiency through increased impact of the programs’ imposed conditions on human capital formation. This requires designing the programs’ targeting and calibration rules specifically to achieve this result. Using data from the Progresa randomized experiment in Mexico, this article shows that large efficiency gains can be achieved by taking into account how much the probability of a child’s enrollment is affected by a conditional transfer. Rules for targeting and calibration can be made easy to implement by selecting indicators that are simple, observable, and verifiable and that cannot be manipulated by beneficiaries. The Mexico case shows that these efficiency gains can be achieved without increasing inequality among poor households.


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