Designing Cost-Effective Cash Transfer Programs to Boost Schooling in Sub-Saharan Africa

Abstract

As of 2007, 29 developing countries had some type of Conditional Cash Transfer (CCT) program in place, while many others were planning or piloting one. However, the evidence base needed by a government to decide how to design a new CCT program is either limited or nonexistent in several critical dimensions. We present one-year schooling impacts from a CCT experiment among teenage girls and young women in Malawi, which was designed to address these shortcomings. The program features four independently randomized dimensions of contract variation: the conditionality, transfer size, schoolgirl/parent transfer splits, and village-level saturation of treatment are all experimentally varied. Despite this rich heterogeneity in contract terms, we find large program impacts that are surprisingly binary. While the re-enrollment rate among those who had already dropped out of school before the start of the program increased by two and a half times and the dropout rate among those in school at baseline decreased from 11% to 6%, these impacts were generally similar regardless of the specific contract terms. If the one-year impacts were to persist, they would indicate that a bare-bones unconditional cash transfer program using low monthly transfers, at least some of which are directly transferred to the children would be the most cost-effective way to increase enrollment in this population.