General Equilibrium Analysis of Conditional Cash Transfers

Nikita Cespedes Reynaga

No 2014-015, Working Papers from Banco Central de Reserva del Perú

Abstract: Conditional Cash Transfer (CCT) program is one of the most important anti-poverty policies worldwide. In this document, I study the economic effects of this program by using a stylized dynamic general equilibrium model. I look at the program’s impact on output, human capital, poverty and income inequality. I also study its welfare implications and its effects on the intergenerational transmission of poverty. The quantitative analysis reveals that a long-term implementation of this anti-poverty program helps to reduce the intergenerational transmission of poverty. In aggregate terms the welfare gain is small, but varies across agents; the winners are those who are in the lower tail of the income distribution and the losers are those located in the upper tail. Finally, this program increases the human capital of households and, through this channel, induces a consistent reduction of both poverty and income inequality.

Keywords: Poverty; Welfare; Cash Transfer; General Equilibrium; Inequality; Overlapping Generations (search for similar items in EconPapers)
JEL-codes: D52 D58 D62 D64 I30 I32 I38 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-dge and nep-lam
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Working Paper: General Equilibrium Analysis of Conditional Cash Transfers (2014)
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