Does one size fit all? The Conditions for Conditionality in Cash Transfers

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Luca Pellerano and Valentina Barca
January 2014

Created in the early 1990s in Latin America, Conditional Cash Transfer programmes (CCTs) are now at the forefront of the international policy debate as one of the most effective social interventions for tackling poverty in developing countries. However, if CCTs have been successful in achieving some of their desired objectives, have the conditionalities themselves played the central role in this achievement?

This paper argues that cash transfers can condition behaviour through at least four different channels: conditioning on access, implicit conditioning, indirect conditioning and ‘explicit’ conditionality. Only the latter characterizes CCTs, while the previous three are often adopted by many types of social transfers that would generally be defined “unconditional”.

The distinction between conditional and unconditional transfers is therefore less clear-cut than often described. Ultimately the effectiveness of conditional transfers depends on the role of ‘explicit’ conditionality mechanisms, as opposed to other traditional means of conditioning behaviour. Proposing a framework for the analysis of this trade-off around four main concepts – principles, benefits, costs, and practical and political feasibility – the paper presents key criteria to consider to determine the feasibility and desirability of using ‘explicit’ conditionalities in social transfers