The world today, and like it always has, faces myriad challenges. And while a lot many of these challenges like climate change are relatively new, many others like poverty and inequality have always existed, even if their form and extent may have undergone continuous changes. Policymakers across the world generally are in quest of policies which can attenuate the effects of these challenges. However, this quest is always beset with various challenges. It is never easy to design a policy, and even when one is designed, it is difficult to ensure that it solves only those problems against whom it is directed and doesn’t create any new unintended ones. Also, while sometimes a successful policy from one place can be appropriated to another, it is difficult to know if that policy, devoid of the larger context in which, and for which, it was designed will solve, or reduce, the same targeted problem in an ill-fitting different scenario. This, however, doesn’t imply that such an exercise shouldn’t be attempted. In fact, every successful policy should be closely scrutinized, however, not just in isolation but along with its context. And if after such an exercise, there exists sufficient rationale to implement it in a different place then it should be.
As mentioned earlier, poverty and inequality are two challenges against which policies are continuously directed, and even if some success has been achieved till now, there always exists a need to achieve more. Moreover, the need gets more pronounced because poverty is not just a phenomenon in itself but rather one that manifests in innumerable other debilitating challenges like hunger, malnutrition and lack of education and healthcare. Also, while both poverty and inequality may largely be problems associated with the developing world, the developed world is not totally immune from them either, particularly inequality. And even though inequality probably doesn’t engender the same challenges as poverty, it also leads to a few like relative poverty. In fact, inequality has steadily increased in the United States over the last two or three decades, and has created, or accentuated, various fault lines. These fault lines, in fact, partly explain Mr. Trump’s ascension to presidency this time as his fiery rhetoric may have the potential to channelize grievances but certainly not to create them.
This demonstrates the need to develop or co-opt strategies that can effectively confront these problems, and Brazil’s Bolsa Familia program provides an interesting case to study for such an endeavor. This program is part of the larger category of Conditional Cash Transfer (henceforth CCT) programs that started in Latin America from 1990s onwards. It is the largest (in terms of number of beneficiaries) and one of the most successful CCT programs in the world. This work attempts to analyze this program and unfolds in the following manner: the first section briefly discusses the broader contours of a CCT program of which Bolsa Familia is a part. The second section focuses on Bolsa Familia and discusses how this program came about, what it constitutes, and how it is implemented. The third section explores the impact of Bolsa Familia as suggested by various socio-economic indicators. The fourth section concludes.
A Brief Look into Conditional Cash Transfer Programs
CCTs came to acquire a very central space in Latin American policymaking in the 1990s with countries like Brazil, Mexico, Colombia, Chile, Nicaragua, and a few others adopting their own distinct variants of it. This happened as a result of the adverse impact of Structural Adjustment Programs and the inability of the existing mechanisms to adequately cope with it. Since generous universal anti-poverty programs were considered as too expensive for developing countries, the focus shifted to target the poorest groups through the use of specific instruments, and cash transfers by government along with conditionalities became an accepted approach. These conditionalities can vary from sending children to school to ensuring that they receive adequate health-care.
CCTs tend to share a few common characteristics which can be looked at; however, under no circumstances can these be considered as exhaustive. For CCTs to be effective, their conditionalities and the increased demand they create must be accompanied with a removal of supply side constraints. They are also sometimes time-specific (the time may vary from country to country) and the beneficiaries are expected to exit or graduate from the program after their time-period gets over or after they cross a particular socio-economic threshold. Also, the unit of support of these programs tends to be a household rather than an individual. However, to ensure better success, at the sub-household level, the transfer should be, and generally is, made to mothers or female caretakers. These programs also tend to take a multi-dimensional view of poverty with focus on a range of indicators like income, health, education, and nutrition. These programs can be considered as a form of social contract between people and the government where assistance is contingent on the people fulfilling certain imposed obligations.
These programs also provide various advantages and serve many aims. They generally have a short-term objective of alleviating poverty via cash transfer and a long-term objective of human capital accumulation through education and health-care related conditionalities. This long-term human capital accumulation, with its focus on children, also helps to break the “intergenerational transmission” of poverty. Also, these programs by creating a sense of joint responsibility between families and government allow for a move away from clientelism, and the existence of conditionalities make them different from mere handouts. These programs are also easier to target vis-à-vis other social assistance programs and use “geographical and household level criteria, including proxy-means tests” to gauge a household’s poverty level. These programs are also able to induce behavioral changes as conditionalities ensure that people spend their money in a different way than they otherwise normally spend.
Understanding Brazil’s Bolsa Familia
CCTs in Brazil started from 1995 onwards when the cities of Campinas, Brasilia, and Riberao Preto started them. All three were aimed at families and required them to send their children to school in return for a payment (provided the families satisfied the eligibility criteria which varied). This initial start led to various other municipalities also adopting CCTs, and a year later, in 1996, their adoption started at the federal level as well. The first federal CCT was the Child Labor Eradication Program (PETI) which started in 1996 and sought to protect children from dangerous and degrading labor. It also followed the same model of providing monetary assistance to households in return for the children attending school (again on the satisfaction of eligibility) and came under the Social Assistance Secretariat. There were also a few other federal CCTs which were created- Bolsa Crianca Cidada, started in 1998, and renamed Bolsa Escola in 2001 followed a similar model but was run by Ministry of Education; Bolsa Alimentacao, which came under Ministry of Health, provided monetary assistance with the conditionality of prenatal exams and vaccines for children; and Cartao Alimentacao which provided cash to families but which could only be used to buy food.
After Mr. Lula came to power, Bolsa Escola, Bolsa Alimentacao, Cartao Alimentacao, along with Auxilo Gas (which provided unconditional cash transfer to poor families) were consolidated into one program called Bolsa Familia in October 2003 (PETI was also integrated in 2006). A new Ministry of Social Development and Fight against Hunger (MDS) was established by merging two previously existing ministries and the Bolsa Familia program was put within its ambit. This ministry has since then again been transformed (this year actually) into Ministry of Social and Agrarian Development (MDSA). The underlying rationale for consolidating various CCTs into one program was that they were being run by different departments and this was leading to a lot of administrative problems. Moreover, a scenario was also possible wherein one family may have availed all the benefits while another, living under similar circumstances, may have availed none.
The Bolsa Familia program today complements the income of more than 13.5 million households. It targets extremely poor (monthly income per person up to R$ 85) and poor (monthly income per person between R$ 85 to R$ 170) families, and provides both basic and variable benefits. The payments are generally made to female members of the household. The website of the concerned ministry MDSA provides the following details (the figures stated are different from those which existed at the start of the program): The basic benefit is provided to extremely poor families (monthly income per person up to R$ 85). These families are paid a basic benefit of the same amount (R$ 85) without any conditionalities.
There also exist different variable benefits. One set of variable benefits are restricted up to 5 per household (this figure of 5 encompasses all the following mentioned benefits): 1) A family with monthly income of up to R$ 170 per person and which has children up to 15 years of age will receive R$ 39 monthly per child (each payment is counted as one, and thus, if there are 3 children, 3 benefits out of the maximum 5 will be considered as having been availed). There also exists a conditionality in this case. The families availing this program have to enroll the concerned child (provided he or she is 6 or above) in school and ensure that his/her attendance is at least 85%. Also, if the concerned child is less than 7 years of age, then he or she needs to visit a health center for periodic check-ups and vaccination. 2) A family with monthly income of up to R$ 170 per person and which has a pregnant woman will receive R$ 39 monthly for nine months (however, the upper limit of 5 exists , and thus, if the family already has five children availing the previous benefit, no benefit will be provided for this case). The conditionality here is that the concerned woman needs to go for prenatal consultations. 3) A family with monthly income of up to R$ 170 per person and which has a child aged between 0 to 6 months will receive R$ 39 per child monthly for six months (again the inclusion of this benefit shouldn’t exceed the upper limit of 5 and each infant is counted separately). The conditionality again is periodic health checkup and vaccination.
Another set of variable benefits are restricted up to 2 per household. A family with monthly income of up to R$ 170 per person and which has an adolescent aged between 16 and 17 will receive R$ 46 monthly per adolescent (for a maximum of two adolescents). The condition is that the concerned adolescent must be enrolled at a school and maintains an attendance of at least 75% every month. Apart from all the aforementioned benefits, if a family’s monthly income, even after receiving some of the above mentioned benefits still remains below R$ 85 per person, then efforts are made to make payments that push the family’s income above R$ 85 per person.
To understand how Bolsa Familia works, it is imperative to mention three of its most essential components- the National Citizens Income Secretariat (SENARC) under MDSA which is responsible for “management and operationalization” of this program, or in most simple terms overseeing the design and implementation of the program; the Caixa Economica Federal which is the “operating agent” of the program, and is responsible for making payments and issuing cards through which cash can be withdrawn; and Cadastro Unico (Single Registry) which in most simple terms can be called as “an information bank on low income families”. Also, even though this is a federal program, it is highly decentralized and municipalities play a very crucial role. They are responsible for collecting information for the registry and also for monitoring of conditionalities.
It is also important to look into three essential aspects of Bolsa Familia: joining the program, monitoring of conditionalities, and leaving the program. To join the program, a family first needs to get registered in Cadastro Unico and then selection is done by a free and fair computerized system (since there is a fixed allotted budget, not all eligible families can be included). Also, a family needs to update its information after every two years to remain in the program, even if there is no change. There is a trade-off involved in the monitoring of this program, and all CCTs for that matter. If the program is too lenient in its monitoring, the goal of human capital formation isn’t achieved. However, a very strict monitoring might lead to an ouster of those families which are actually most vulnerable and thus the goal of poverty alleviation gets undermined. Thus, under Bolsa Familia, a very cautious approach has been adopted, and noncompliance generally leads to suspension, and very rarely to termination. A family may leave the program under following circumstances: if it fails to update its information; if its condition improves and it no longer remains eligible; if it voluntarily decides to withdraw (it can return back within 36 months provided it is eligible without undergoing a new selection process); or if it fails to fulfil the conditionalities (rarely happens though). There is no upper time-limit as such as that again defeats the purpose of human capital accumulation.
Impact of Bolsa Familia on Various Spheres
This section discusses the impact of Bolsa Familia on the following spheres: Poverty, Inequality, Education, Health, and Gender related areas. A few caveats are in order though. First, any observed change (for better or worse notwithstanding) can’t/shouldn’t simply be linked to the existence/implementation of a policy even if there is a strong correlation. It is important to identify some causal pathway as well. Second, even if such a causal pathway is identified, it is not necessary for the concerned policy to be the only contributory factor for that change, and other factors, distinct from the concerned policy, may exist as well. These factors and the concerned policy may play their own respective parts for the observed net change. Third, in this section, efforts have been made to identify the causal pathway for every change/impact that has been linked to Bolsa Familia. However, in many cases this couldn’t be done and only the final results of the respective studies have been mentioned without providing any details of the causal linkage.
Inequality: A working paper by Sergei Soares for International Policy Centre for Inclusive Growth states that “Bolsa Familia contributed mightily to reduction of inequality but was far from its main source” and also enumerates the findings of various studies. The paper cites various studies which demonstrate that the contribution of Bolsa Familia in the reduction of Gini Coefficient varies from 12-31% (the studies are for different time periods of the program and have methodological differences). Among the listed ones, the two which were published last (in 2010) measured Bolsa Familia’s contribution to inequality reduction as 19% and 16%. The time periods they covered were 2001-07 and 1999-09 respectively. The paper further states that it is surprising that a program which amounts to less than 1% of the total household income can contribute up to 30% in inequality reduction. It also states that lately the gains have been more modest probably because of diminishng returns.
Poverty: Poverty in Brazil as measured through various indicators (poverty headcount, headcount index, poverty gap etc.) stood at its highest value in 2003 and hadn’t changed much since 1995. From 2003 onwards, however, poverty has declined along all indicators (headcount fell from 61 million in 2003 to under 40 million in 2009 and headcount index from 35.8 to 21.4). Although Bolsa Familia has played an important role in this, it is important to note that other factors like economic growth, increased unskilled labor demand, and an increase in minimum wage probably also contributed.
The paper by Soares discusses another work which evaluates the impact of Bolsa Familia on poverty. This study calculates for every year a counterfactual figure of poverty which would have existed had there been no Bolsa Familia. The study states that from 2005 onwards, the effects become more pronounced and in 2009 Bolsa Familia reduced poverty and extreme poverty by 1.9 and 1.6 percent respectively. These numbers correspond to 13 percent of poverty and 32 percent of extreme poverty for that year. Also, the effects were more pronounced on measures of poverty like poverty gap and severity of poverty which to put it simply measure how poor the poor are.
Education: It is important to mention about two surveys, one in 2005 and another in 2009, commissioned by Ministry of Social Development and Fight against Hunger (MDS) as part of a baseline study on Bolsa Familia. The first survey interviewed 15,426 households and was referred to as AIBF-1. The second follow-up survey in 2009 was of the same households (only 11,433) could be traced and was referred to as AIBF-2. The two studies discussed here use this as their information base.
The first study was published in 2007 in an edited volume published by MDS and its education related findings have been discussed. This study used three groups based upon 2005 survey: the first was a “Treatment” group consisting of households that were using Bolsa Familia, the second was called “Comparison 1” (C1) and consisted of households that were receiving other allowances and not Bolsa Familia, and the third called “Comparison 2” (C2) consisted of households that were not receiving any allowance though were registered in Cadastro Unico. This study doesn’t compare the treated sample in two moments of time, and thus, some non-observable characteristics (observed can be controlled for) between treatment and control groups may have played a role in the observed results. This study makes the following findings related to education: On the attendance parameter, Bolsa Familia beneficiaries were found to have a lower attendance in relation to C1 group. This may be because the C1 group also received educational allowances which were running from before Bolsa Familia (like PETI which hadn’t been included in Bolsa Familia in 2005) and which also had attendance requirements. Bolsa Familia beneficiaries were found to have a better attendance than C2 group. On the school dropout parameter, Bolsa Familia beneficiaries had lesser dropout rates than both C1 and C2 (particularly from C2), excluding just C1 recipients from North/Midwest region.
The second study was published as a discussion paper by International Food Policy Reearch Institute in 2014 and its main findings have been discussed. The treatment group of this study contains those households which received Bolsa Familia in 2009 but not in 2005 (and didn’t receive any benefit from any of Bolsa Familia’s predecessor programs either) although they were registered in Cadastro Unico. The comparison group consists of those households which were registered in Cadastro in either 2005 or 2009 and are comparable to Bolsa Familia beneficiaries on various other parameters but received no Bolsa Familia benefit (and neither of its predecessor programs) in 2005 or 2009. Their findings suggest that Bolsa Familia improved attendance among children aged 6-17 by 4.5 percent though, on average, it didn’t have much effect on class promotion. Significant improvements were observed, however, in the subsample of girls. Their attendance increased by 8.2 percent and rates of class promotion by 10.4 percent. The authors state that this finding is consistent with those of most other CCTs in other countries but the difference is that herein the girls weren’t at any disadvantage previously vis-à-vis boys in the measured parameters, and thus, the observed result is not due to any catchup effect. Also, the payments were same for both boys and girls and thus that can’t be a factor either. They disregard a few other contributory factors as well and suggest that their “results are suggestive of sex-based differences in cost or ease of succeeding and progressing in school” although there is insufficient evidence to be conclusive.
Health: There exists a lot of literature that deals with the impact of Bolsa Familia on this parameter. A few of them have been briefly discussed here. One of the earliest studies is the same first one that was previously mentioned for the education sector. It finds that children in Bolsa Familia beneficiary households were comparatively less vaccinated than those in C1 and even C2 groups. It states that it may be because of lack of access to health services as Bolsa Familia beneficiaries may be from areas of “less demographic density and worse conditions of access to health services”.
Another study which utilized a data collected in 2005-06 wherein 22,375 impoverished children less than 5 years of age were surveyed came up with the following results: Children from Bosla Familia beneficiary households had a 26% greater chance to have a normal height for age than those from non-beneficiary comparable households and this difference also existed for weight for change. The study suggests that cash transfer by Bolsa Familia probably allows families to redirect resources towards acquisition of more and better food and that probably explains the difference. Another study that covered the period 2004-09 and 2853 municipalities concluded that Bolsa Familia reduced childhood mortality overall, and particularly for deaths caused by poverty related ailments like diarrhea and malnutrition. Another study concluded that during its first five years, Bolsa Familia was “associated with a significant 9.3 percent reduction in overall infant mortality rates”. It suggests the following pathways through which this may happen: Bolsa Familia may lead to increased use of prenatal services, better immunization, and an increased familiarity with the healthcare system. It may remove various financial barriers to better health services as well like loss in potential wages and transportation costs.
Gender related areas: The findings of a quantitative study that discusses the impact of Bolsa Familia on women’s decision making power have been discussed herein: This study also used the AIBF-1 and AIBF-2 surveys. Bolsa Familia has affected women’s decision making power but the effects haven’t been uniform. A significant increase in women’s decision making power was observed but mostly in urban households and no such effect was observed in rural ones. The spheres in which an increase was observed were related to contraception use, children’s school attendance and health expenses, and household durable goods. The most pronounced impact was on contraception use with Bolsa Familia responsible for causing an almost 10 percent increase in women being the only decision maker on contraception use. The study also discusses a possible pathway for this result which is based on “Nash cooperative bargaining models of household behavior” though it provides counterarguments against it as well. According to this pathway, Bolsa Familia cash transfers which are generally made to women put more resources under a women’s control which leads to a higher “threat point” for exiting a relationship, thus providing women with more bargaining power and through that increasing their decision making power.
The study also provides probable reasons for why no significant, and in fact slightly negative, result is observed for women in rural areas. For this, it first discusses another study which shows that Bolsa Familia leads to a significant decrease in women’s labor supply in rural areas without affecting it in urban areas. The mentioned probable cause for this is that in rural areas it takes women more time to fulfil the conditionalities because of more remoteness and greater travel times to clinincs and schools, thereby reducing their presence in the labor market. This reduced presence in labor market may lead to a reduction in rural women’s control of resources, and through it a slight reduction in their decision making power.
An interesting point which can, thus, be derived here is that Bolsa Familia has probably increased the capability set of urban women while simultaneously decreasing it for rural ones. As per a few qualitative accounts, Bolsa Familia has allowed various women to separate from their partners. As per Amartya Sen’s capability model which focuses on well-being enhancement, functioning is defined as actual achievement of what a person values or has reason to value while capability is defined as all the sets of functionings from which a person can choose. Thus, say for example a woman values or has good reason to value a more equitable relationship (and all other benefits a more equitable relationship entails) and in urban areas Bolsa Familia is allowing that (by increasing their decision making power), thereby improving her functioning or a set of functioning. Now this set of functioning is clearly incompatible (both arrangements can’t happen simultaneously) with another set of functioning wherein a woman values or has reason to value separation from her partner (and all benefits this arrangement will provide) even if say supposedly she isn’t in a troubled relationship. This can be considered as another set of functionings. Bolsa Familia is allowing urban women to choose from either set, thus not only enhancing their functioning set, but also allowing for an expansion of their capability set.
However, this isn’t happening in rural areas. In fact, if anything even a particular set of the women’s functionings is getting undermined as their decision making ability has been slightly reduced. There is no capability set expansion either. Thus, this shows that the underlying reasons for this loss need to be targeted and focus should not just be on providing payments and imposing conditionalities but also ensuring that these conditionalities can be easily met without putting much pressure on women.
This work looked at the Bolsa Familia program and also the impact it has probably created. The impact was analyzed along five indicators: Inequality, Poverty, Education, Health, and Gender related issues. It was observed that Bolsa Familia has played an important and significant, if not a very huge, role in alleviating people’s problems along all these five parameters. It shows that the state does indeed have a role to play, and if properly undertaken, that role can prove very beneficial for everyone. Also, it needs to be mentioned that there are various arguments against imposing conditionalities but they were not discussed. It was not because of their relative merits or demerits but because herein Bolsa Familia was analyzed as a CCT and an absence of conditionalities changes that character. It is difficult to predict how this program devoid of conditionalities would have panned out and if the benefits would have been the same. It hasn’t happened and the aim of this work was to analyze what has, and not posit a counterfactual. However, the question of presence or absence of conditionalities notwithstanding, it is important that those conditionalities don’t put unnecessary burden and can be easily fulfilled. Herein, again the role of state becomes crucial in making the fulfillment of those conditionalities easier. Also, it is important that when people fulfill the conditions, they actually derive some gains and not just do it for doing’s sake. The state needs to act here as well since a child’s mere attendance in school doesn’t help much if the teachers are not competent enough and the child doesn’t learn much.
The author, Achyut Mishra, is a student of the Jindal School of International Affairs.