The heterogeneous effects of conditional cash transfers across geographical clusters: do energy factors matter?

Are the effects of antipoverty policies heterogeneous across geographical clusters? If so, do contextual factors affect these differences? This paper addresses these questions by examining the effects of a conditional cash transfer (CCT) program in Brazil. While extensive research has been conducted on the evaluation of the mean impacts of CCTs on human development, research examining the heterogeneity of the effects across areas and its determinants is lacking. This is a crucial issue as CCT programs are now implemented in many countries that are large and geographically heterogeneous. The empirical analysis in this study uses an augmented multilevel model for the case of Bolsa Família in Brazil. The findings show that the effects of the antipoverty policy adopted vary across geographic clusters, especially when considering the ultimate goals of these programs (e.g. health status), compared to the intermediate outcomes (e.g. school attendance). The findings also underline the major role of the energy infrastructure in explaining such heterogeneity, providing empirical evidence on the importance of energy for poverty reduction. The paper also indicates that additional policy interventions can complement direct cash transfers to make poverty reduction more effective.