Date

2014

Department or Program

Economics

Additional Department or Program (if any)

International Relations

Primary Wellesley Thesis Advisor

Patrick McEwan

Abstract

The simplicity of giving money to the poor for a specific and pre-approved purpose appeals to many stakeholders in the field of development— particularly policymakers and economists. In education policy, conditional cash transfers have been effective in improving school attendance and enrollment, as well as lowering child labor supply. However, the effects of CCTs have only been studied after a relatively short period of time after the transfer. The ultimate goal of investment in education is to get a return on that investment through an improvement in children’s long-term wellbeing. This thesis captures these effects on long-term educational and labor supply outcomes up to a decade after the end of Honduras’s CCT, PRAF. For the older education transfer recipients, the results include a 0.2-year increase in total schooling, a 2.7-percentage point increase in school attendance, and a 3.1-percentage point increase in literacy rates. The treatment effect on overall schooling increased over time, demonstrating that PRAF’s impacts were not only sustained after the transfer, but that they actually grew over time. These effects were strongest for the poorest students, reaching over a full year of additional schooling between 2007 and 2009. Robustness checks support these results and a cost-benefit analysis suggests a high rate of return on the Honduran government’s investment. These results not only answer questions about the effectiveness of PRAF in the context of Honduras, but also begin to fill a substantial void in the literature on long-term poverty alleviation strategies.

Share

COinS