The Growth of Conditional Cash Transfers in Latin America and the Caribbean: Did They Go Too Far?

Conditional Cash Transfers (CCTs) are an endogenous innovation from Latin America and the Caribbean (LAC) that aims to reduce current poverty while developing the human capital of the next generation, in the attempt to break the intergenerational transmission of poverty. Pioneered in Brazil and Mexico in the late 1990s, by 2011 CCTs had spread to 18 countries in the region and covered as many as 135 million beneficiaries. In this paper, we use administrative and household survey data to document (i) the evolution of CCTs and poverty in LAC, (ii) the relationship between expanded coverage and the quality of targeting and (iii) the change in beneficiary household characteristics. We show that in most countries the transfers represent over 20% of poor beneficiaries' incomes, and the poverty headcount index would be on average 13% higher, had CCTs not been implemented.