Inequality and conditionality in cash transfers: Demographic transition and economic development

Koji Kitaura and Kazutoshi Miyazawa

Economic Modelling, 2021, vol. 94, issue C, 276-287

Abstract: This study examines the effects of conditionality in cash transfers on inequality to alleviate current poverty and reduce its intergenerational transmission. We consider an overlapping generations model with endogenous fertility, where poor households face a trade-off between schooling and child labor. We show that adding conditionality induces a fertility differential increase if the relative wages for child labor are high. When comparing conditional cash transfer programs and unconditional cash transfer programs, our numerical analysis suggests that conditional cash transfer programs promote a take-off from a poverty trap in the short run, but it may worsen income inequality as a whole by increasing the fertility rate of low-income groups.

Keywords: Conditional cash transfer; Child labor; Differential fertility; Inequality (search for similar items in EconPapers)
JEL-codes: I25 J13 O11 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:94:y:2021:i:c:p:276-287

DOI: 10.1016/j.econmod.2020.10.008

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