Conditional Cash Transfers and Education Quality in the Presence of Credit Constraints

Elena Del Rey and Fernanda Estevan

No 1108E, Working Papers from University of Ottawa, Department of Economics

Abstract: We investigate the relative merits of unconditional cash transfers (UCT), conditional cash transfers (CCT), and improvements in education quality on efficiency and welfare. In our setting some parents under-invest in their children's education because capital market imperfections prevent them from borrowing. When credit constrained households can be perfectly targeted by the government, we show that CCT are more effective than UCT in enhancing efficiency and equivalent in terms of welfare. When public education quality is very low, raising quality is welfare improving, but is never efficiency enhancing. If the government cannot target constrained households, UCT may be the best policy both in terms of efficiency and welfare.

Keywords: conditional cash transfers; public education; education quality; unconditional cash transfers; credit constraint; efficiency; welfare (search for similar items in EconPapers)
JEL-codes: H31 H42 H52 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2011
New Economics Papers: this item is included in nep-dev and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Conditional cash transfers and education quality in the presence of credit constraints (2013)
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