Does supply matter? Initial schooling conditions and the effectiveness of conditional cash transfers for grade progression in Nicaragua

The authors use a randomised evaluation to examine the effect of a conditional cash transfer programme on grade progression in Nicaragua from 1999 to 2003, putting the spotlight on initial supply-side conditions and the extent to which they conditioned programme effectiveness. Their principal findings are that the programme had a substantial effect on grade progression and it was more effective in areas with autonomous schools. At the same time, it was also more effective in intervention areas with poor initial supply conditions as measured by indicators of grade availability and distance to school. These areas had lower outcomes before the programme, and thus more room for improvement. The results suggest that initial school supply conditions are not insurmountable obstacles for the successful implementation of a conditional cash transfer (CCT) programme, as long as these constraints are identified at the planning stage and mechanisms put in place to address them during execution.