Latin America’s Welfare Revolution: Conditional Cash Transfer Policies in Brazil and Mexico

By Emmet Hollingshead

Latin America is not an eden of socio-economic stability. Colonialism, capitalism and authoritarian communism have not been kind to the poorer classes of the continent. It is the most unequal region of the world in terms of wealth, with 10% of Latin Americans owning 71% of the continent’s wealth. The poverty rate is also staggering, with 5.6% of the population living on less than US$1.90 per day. Consequently, poverty and wealth inequality have become top priority political issues all around Latin America. In particular, many Latin American countries have turned to Conditional Cash Transfer policies (CCTs) as a way to combat rampant inequality and poverty. The premise is simple: give poor families small sums of cash as long as they keep their kids in school, get them vaccinated, and seek regular medical checkups for children and mothers.

Not only does this increase the purchasing power of the lower classes, it provides immediate incentives for individuals to add to their own long term human capital.

So far, the programs have been highly successful, and citizens are broadly calling for expansions.

The two largest CCTs in terms of registrants are in Brazil and Mexico. Brazil’s Bolsa Família has been heralded as an astounding success by academics, commentators and politicians from across the intellectual spectrum. Bolsa Familia is “a poverty-fighting effort that was revolutionary in its size, ambition and design,” and has more individuals enrolled than any other CCT program in the world. Bolsa Familia has so greatly improved quality of life in Brazil that it has been copied and implemented in similar forms all around Latin America, and even New York City.

 


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Mexico’s CCT program was originally formed as PROGRESA (Programa de Educación, Salud, y Alimentación) in 1997, expanded and renamed Oportunidades in 2002 and renamed Prospera in 2014. Prospera reached about 5 million families by 2006 and “is considered Mexico’s most important antipoverty program.[1]” Similar to Bolsa Família, Prospera gives small sums of cash to families provided that they meet requirements about school attendance, vaccinations and regular medical checkups. Only about half the size of Bolsa Família in terms of number of participants, it has had somewhat smaller but still significant economic and social impacts.

STRUCTURE OF THE PROGRAMS

Bolsa Familia was formed as part of a larger initiative, called Fome Zero. Fome Zero was implemented in 2003 with the goal of “overcoming the food and nutritional insecurity that affects thousands of Brazilians”. The program included a series of institutional reforms, welfare policies and subsidies designed to improve food security in Brazil. Bolsa Familia benefits are based on income, number of children and age of the children. Determinations for poverty are “a fourth of the minimum wage per capita for the extreme poverty line and half of the minimum wage per capita for the poverty line”. Families with children above the age of 16 receive higher benefits, but stop receiving benefits for that child once the child turns 18. Payments are made monthly and timing within the month is based on the family’s registration number. Families can collect their benefits at “Caixa [the Federal Economic Fund] offices, lottery offices, authorized bank branches, automatic teller machines and post offices”.

PROGRESA was first set up in 1997 as a conglomeration of previous anti-poverty programs in Mexico. Its objective was to target intergenerational poverty by increasing the human capital of children, and ended up providing a model for other CCTs, including Bolsa Familia. Specifically, the initial PROGRESA program was oriented towards rural communities, as those communities had a deeper poverty gap[2]. Additionally, PROGRESA focused on only the poorest of households. Santiago Levy, a Deputy Finance Minister in Mexico who became one of the chief architects of PROGRESA, outlined five main objectives of the program: improve health, help young people complete their primary education, integrate policies designed to increase education, health, and nutrition, redistribute income and encourage responsible and active family life[3]. Though the program started with 300,000 families and a budget of US$58.8 million, it now covers 24 percent of Mexican citizens[4]. Vicente Fox’s expansion of the program into urban areas is a major reason for this increase. By 2012, benefits averaged US$130 per month per household. For both programs, benefits are given directly to the mother of the household, which has lead to a thought-provoking critique from feminist scholars. (See: Handl and Spronk, and Pathways of Women’s Empowerment)

A significant difference between PROGRESA and Bolsa Familia was that PROGRESA “was to operate instead of, not in addition to, existing food subsidy programs”[5]. Mexican policymakers believed that the existing food subsidies did not do a sufficient job of making food more accessible for the poorest citizens. They also were under budgetary restrictions which limited their ability to create a new anti-poverty program without eliminating spending elsewhere. Emerging from Mexico’s fiscal crisis of 1995 meant intense political pressures to maintain conservative budgets.

A second significant difference is the way individuals are enrolled in the program. In Prospera, the Mexican government surveys census data to select communities which have high rates of poverty and poverty-related struggles. Then, specific households from that community are selected for enrollment in the program. Finally, community assemblies will review the selected households for final approval. More often than not, these community assemblies make no changes to the proposed list. In Brazil, any family can go to the Caixa office for their local municipality and enroll themselves. Municipalities will review census data to estimate the number of residents who qualify for the program and where they are most concentrated. The municipality will then make home visits to enroll families in the program. The result is that Bolsa Familia enrolls and provides benefits to many more families than Prospera does.

Analysis from a wide array of sources suggests that Bolsa Familia has shrunk inequality and improved economic prospects for the poor in Brazil. While Bolsa Familia is only one in a series of anti-poverty programs in Brazil, “according to FGV [a Brazilian university], about one-sixth of the poverty reduction can be attributed to Bolsa Família”. In areas of education, health, and poverty and inequality, Brazil has seen a marked increase across a number of indicators since the start of the Bolsa Familia program.

In education, studies suggest that Bolsa Familia has resulted in marginal increases in school attendance[6], lower dropout rates and moderately increased grade promotion rates[7]. Interestingly, the data also points to “large, significant effects across both younger and older girls in rural areas but concentrated among girls aged 15–17 years in urban areas”[8]. Bolsa has not shown any signs of increasing its impact as the program gets older. However, achievement in education steadily increased as children stayed enrolled in the program. In health, there has been higher access to healthy food[9] and “improved health care utilization”[10].

Because benefits are given to the mother of the family, Bolsa Familia has also resulted in statistically significant increases in women’s decision-making power[11]. However, there is a stark division between rural and urban households. In urban households, women have seen huge increases in power over “spheres related to children’s school attendance and health expenses, household durable goods purchases, and contraception use”[12]. Yet rural women have seen no increase in decision making power and in some cases have seen decreases.

Analysis of Prospera has been equally extensive and encouraging. In an analysis on CCTs around the world, Tina Rosenberg said that Prospera “marks the first time modern Mexico has had an effective anti-poverty program”. Prospera plays a more central role in the Mexican anti-poverty regime than Bolsa Familia does in Brazil. And similar to Brazil, Mexico has seen significant increases in education, health and poverty and inequality.

There has been increased enrollment in schools and decreased grade repetition and dropout rates. However, there has been no significant impact on attendance rates or on achievement test scores[13]. This shows that Prospera does a good job of getting the children to sign up for school, but does not affect them once they are in school. Across health indicators, Prospera has again showed positive results. A 2001 study found that areas in Mexico with Prospera saw 18.2% more clinic visits than areas without Prospera[14]. The impacts were tangible, too; nationwide, rates of illness in children ages 0-2.9 decreased by 13.7%[15].

While not enjoying the same macroeconomic success as Brazil has over the past couple of decades, data suggests that Mexico has seen similar levels of improvement in the day to day lives of its poorest citizens. Across the board, analyses of the program find moderate to high levels of improvement in education, health and poverty.

MOVING FORWARD

Santiago Levy argued in a paper for the Brookings Institution that social welfare policy is contingent on the surrounding policy structure. This appears to hold true for these programs, as Bolsa Familia has been able to have a larger impact than Prospera in part because it fits within a larger anti-poverty/anti-hunger agenda. In that same vein, both Brazil and Mexico could see greater results from these programs by improving the infrastructure on which health, education and employment rely.

Better schools and teachers, more hospitals and doctors and greater access to economic opportunities for rural families will all build on the success of the CCT programs.

Both Mexico and Brazil maintain extensive data on the impacts and management of the programs, and they make this data publicly accessible, which means that social scientists are constantly contributing suggestions as to how the program can improve. This data is essential to the continuing growth and management of the CCT programs and shows a solid commitment from both governments to place impact over legacy.

There are few national economic policies which have received such acclaim from such a wide array of sources as conditional cash transfer programs. Though nothing in this world is without its flaws, CCTs have proven their worth as anti-poverty measures. There is real reason to hope that tomorrow holds a brighter future for impoverished Latin Americans.


[1] López-Calva, Luis Felipe., Nora. Lustig, and United Nations Development Programme. Declining Inequality in Latin America : A Decade of Progress?New York: United Nations Development Programme, 2010. 176. Print.

[2] Yaschine, Iliana and Orozco, Monica E. “The Evolving Antipoverty Agenda in Mexico: The Political Economy of PROGRESA and Oportunidades.” In Conditional Cash Transfers in Latin America, edited by Michelle Adato and John Hoddinott. 55-77. Baltimore: Johns Hopkins University Press.

[3] Levy, Santiago. 2006. Progress Against Poverty : Sustaining Mexico’s Progresa-Oportunidades Program.Washington, D.C.: Brookings Institution. Page 21.

[4] Levy, Santiago. Progress Against Poverty. Page 4.

[5]  Levy, Santiago. Progress Against Poverty. Page 81.

[6] de Brauw, Alan, Daniel O. Gilligan, John Hoddinott, and Shalini Roy. 2015. “The Impact of Bolsa Família on Schooling.” World Development 70: 303-316.

[7] Glewwe, Paul, and Ana Lucia Kassouf. 2012. “The Impact of the Bolsa Escola/Familia Conditional Cash Transfer Program on Enrollment, Dropout Rates and Grade Promotion in Brazil.” Journal of Development Economics 97 (2): 505-517.

[8]  de Brauw, Alan, Daniel O. Gilligan, John Hoddinott, and Shalini Roy. 2015. “The Impact of Bolsa Família on Schooling.” World Development 70: 303-316.

[9] Martins AP, and Monteiro CA. 2016. “Impact of the Bolsa Família Program on Food Availability of Low-Income Brazilian Families: A Quasi Experimental Study.” BMC Public Health 16 (1): 827.

[10] Shei, Amie, Mitermayer Reis, Federico Costa, and Albert Ko. 2014. “The Impact of Brazil’s Bolsa Família Conditional Cash Transfer Program on Children’s Health Care Utilization and Health Outcomes.” BMC International Health and Human Rights 14 (1): 1-9.

[11] De Brauw A., Gilligan D.O., Hoddinott J., and Roy S. 2014. “The Impact of Bolsa Família on Women’s Decision-Making Power.” World Development 59: 487-504.

[12] Ibid.

[13] Behrman, Jere R. and Parker, Susan W. “The Impacts of Conditional Cash Transfer Programs on Education.” In Conditional Cash Transfers in Latin America, edited by Michelle Adato and John Hoddinott. 55-77. Baltimore: Johns Hopkins University Press.

[14] Morris, Saul S. “Conditional Cash Transfer Programs and Health.” In Conditional Cash Transfers in Latin America, edited by Michelle Adato and John Hoddinott. 55-77. Baltimore: Johns Hopkins University Press.

[15] Ibid.


Emmet Hollingshead is a International Studies and Political Science major from Macalester College. He is on the soccer team,  a founding member of Macalester Quakers, and will be studying abroad in Buenos Aires in Spring 2017.


The views expressed in this article are those of the writer. The Contemporary takes no institutional positions on matters of policy or opinion.


Photo above was taken by Matteo0702 in 2010. It can be found here. It is under a CC BY-SA 2.0 license.

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