Challenge
Conditional cash transfers are funds given to households if they fulfill certain requirements, such as sending their children to school. These cash transfers can boost households’ investment in health and education; however, they are expensive, and it is often complicated to track and enforce compliance with the requirements. Removing the conditions may make cash transfer programs more cost effective by decreasing administrative costs, while still providing a nudge to increase school participation.

Design

The Moroccan Ministry of Education piloted a “labeled cash transfer” (LCT) program that made cash payments to parents of children aged 6 to 15 years. The program did not require that participants actually attend school in order to receive the payment, but the program’s features made it very clear that the program was linked to school attendance:

School headmasters were responsible for enrollment and informing the parents of school-aged children about the program.
Parents enrolled their children in the program at school.
Because enrollment happened at school, headmasters also enrolled children in school while signing them up for the program.
The flyers that schools used to promote the program in communities showed children sitting at their school desks and had the headline “Pilot program to fight against school dropout,” and the phrase “So that your child’s seat is not left empty.”
To reduce both the cost of determining program eligibility as well as any confusion that participants might feel about whether or not they qualified, all children in the participating school districts could enroll in the program.

The payments were much larger than a family’s yearly schooling expenditures, but smaller than most conditional cash transfers. The average payment represented 5 percent of the average monthly household consumption, but the range for most conditional cash transfers is between 6 and 27 percent of mean monthly household consumption.

Recipients received cash transfers at their local post office. About a third of participants, who lived in areas that did not have a post office, received the visit of a “mobile cashier” in charge of distributing the transfers.

Impact
A randomized evaluation found that over two years, the labeled cash transfer (LCT) significantly increased school participation, re-enrollment of school dropouts, and primary school completion. In fact, as indicated by the graph, the labeled cash transfer had larger effects on school participation than the more expensive conditional cash transfer, in which families only received transfers if their child did not miss school more than four times per month.

School attendance at schools with the LCT program increased by 7 percentage points to 81%, compared to 74% at schools without the program.
27% of students at LCT schools who had dropped out prior to the program re-enrolled during the two years of the LCT pilot, a 12 percentage point increase compared to non-LCT schools.
The program also improved primary school completion by 8 percentage points (72% at LCT schools; 64% at non-LCT schools) and reduced school dropouts by 8 percentage points (10% at LCT schools; 2% at non-LCT schools).
Interest in the program was very high; 97% of households had at least one child enrolled in the program by the end of the second year.
Perceptions of school quality increased in communities with the cash transfer program, and parental beliefs regarding the returns to education also dramatically increased. The program also reduced the number of students who dropped out because they did not want to be in school as well as the number of students who dropped out because they thought their school was of poor quality. This indicates that the program works by increasing the salience of education for parents, and by serving as a positive signal about the value and quality of education at their local school.

Source: B-Hub