Turning a Shove into a Nudge? A “Labeled Cash Transfer” for Education
“Labeled Cash Transfers” encourage school participation, particularly girls’ re-enrollment in school after dropping out, at a lower cost than traditional Conditional Cash Transfers.
Conditional Cash Transfer (CCT) programs provide payments to families in exchange for compliance with certain conditions, such as regular school attendance or vaccinations for their children. Traditional CCT programs for education typically make payments to mothers explicitly conditional on their children’s school attendance. Although these programs have proven effective at increasing households’ investments on education and healthcare in a variety of countries, they are expensive to administer.
This study examines the impacts of an alternative type of program, a “Labeled Cash Transfer” (LCT). In a traditional CCT program, mothers do not receive the grant unless administrators can verify that their children have met the school attendance requirements. However, in an LCT program, this monitoring is not necessary: families do not have to meet any specific requirements to get the transfer. However, the grant is labeled for education and is administered through schools, which may encourage the same positive gains in school attendance as a strict conditional grant that is more expensive to monitor.
In this study, the authors compare the impacts of an LCT program to a new CCT program targeting primary school completion in rural Morocco in order to determine whether LCTs can have similar beneficial impact with lower costs. While most CCT programs pay the transfer directly to mothers, in this study the authors vary whether LCTs and CCTs are paid to mothers or to fathers to test whether the gender of the recipient affects the children’s school attendance and completion. Additionally, the authors document whether LCTs and CCTs differentially affect parents’ perceptions of the value of education for girls and improve girls’ school attendance.
In rural Morocco, the LCT was less expensive yet equally effective as a standard CCT, regardless of whether it went to the mother or father. Additionally, LCTs significantly reduced the dropout rate and increased re-enrollment among students who had previously dropped out.
- Overall, LCTs increased the school participation rate when paid to mothers or fathers.
- School participation rate increased by 7.7 percentage points with LCTs paid to mothers and by 7.3 percentage points with LCTs paid to fathers compared to no payments.
- The school participation rate for participants also increased by 2 percentage points in the LCT group (mother and father recipients combined) compared to the CCT group (mother and father recipients combined).
- LCTs almost doubled the school re-entry rate for boys and girls when paid to either mothers or fathers.
- School re-entry rate increased from 14.7% in the control group (no payment) to 26.5% in the mothers’ LCT group and 27.2% in in the fathers’ LCT group.
- School re-entry rate also increased in the CCT groups but to a lesser effect (22.5% in the mother’s LCT group and 20.9% in the fathers’ LCT group).
- LCTs were most effective in increasing school re-entry among girls who had previously dropped out of school.
- School re-entry for girls increased by 12.8 percentage points with LCTs paid to mothers and 12 percentage points when paid to fathers compared to no payments.
- School re-entry for girls also increased in the mothers’ CCT group but only by 4 percentage points and was virtually unchanged in the fathers’ CCT group.
- Conditionality and gender of recipient (i.e. mother vs. father) had little effect on student attendance and school completion.
- Both programs reduced the school dropout rate by about 5 percentage points compared to the control group.
- Both programs had a large positive impact on parents’ perception of the value of education for girls compared to the control group.
The results of this study indicate that LCTs can improve school participation and completion while reducing the costs of targeting, monitoring, and administering traditional cash transfer programs. Unconditional programs that are administered through schools can provide a tacit endorsement of the school system and positively affect parents’ perceptions of the value of education for girls.
Therefore, while CCTs are effective at increasing investments in education, these results suggest that less restrictive incentives (“nudges”) like LCTs might be sufficient to change perceptions and behaviors.
This study was conducted in conjunction with the Moroccan Ministry of Education and administered in over 320 school sectors in Morocco. The researchers randomly assigned sectors to one of five groups: a control group that received no transfers (60), a group that received LCTs paid to fathers (40), one that received LCTs paid to mothers (40), one that received CCTs paid to fathers (90), and one that received traditional CCTs paid to mothers (90).
The researchers visited each school seven times over the course of two years to collect school attendance data. Additionally, approximately 4,400 households from across the sample were selected to participate in surveys at the beginning and the end of the two-year period on family characteristics, school attendance history, and parents’ perceptions of education. The researchers also collected information from approximately 3,300 children randomly sampled to take an arithmetic test at the end of the two-year period to determine whether CCTs and LCTs had an effect on academic achievement. Finally, the researchers administered surveys to teachers and parents in schools to determine their level of awareness about the program, particularly whether they understood the conditional aspect of CCTs.