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Can conditional cash transfers serve as safety nets to keep children at school and out of the labor market?

Alain de Janvry, Frederico Finan, and Elisabeth Sadoulet
University of California at Berkeley

Renos Vakis
The World Bank

November 2004

SARPN acknowledges the University of Carlifonia at Berkeley as a source of this document: www.berkeley.edu
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Abstract

Conditional cash transfer (CCT) programs for education are known to be effective in increasing educational achievements among the rural poor. Using panel data from the Progresa experience with randomized treatment, we show that there is strong state dependence in school attendance. Short term shocks that take children out of school will consequently have long term consequences on their educational achievements. We show that idiosyncratic and covariate shocks do indeed push parents to take children out of school and to use child labor as risk coping instruments. However, CCT help protect children from these shocks, creating an additional benefit from these programs as effective safety nets with long term benefits.



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