GINI DP 84: Conditional cash transfers in high- income OECD countries and their effects on human capital accumulation

Despite high general level of school enrolment and attendance in high-income countries a substantial gap is often seen between schooling outcomes of children from high-income and low-income families or between majority and minority ethnic groups. As a policy solution to this problem several countries have adopted so-called conditional cash transfers, which are targeted transfers incorporating a behavioural condition. As reviewed for example by Fiszbein and Schady (2009), conditional cash transfers have been increasingly popular in developing countries of Latin America, Africa and Asia, but these types of programs are also part of the welfare state of some high-income countries. In high-income countries such transfers most frequently relate to labour market transfers and conditions require active labour market behaviour of transfer recipients. In this review we are interested in human-capital related CCT programs that operate in OECD countries. The first section gives a summary of the aims, types and potential effects of conditional cash transfers. Then section two provides an overview of conditional cash transfer programs adopted in high-income OECD countries. The third section reviews results about the effects of these programs on human capital accumulation of disadvantaged children.