Poverty, inequality and public cash transfers: lessons from Latin America

As governments consider which policy parameters to select when designing a new cash transfer and how to fine-tune existing transfers, information on the design options available, on the contribution of specific cash transfer parameters to outcomes and on the implementation details that facilitate these linkages, is critical. Focusing on public cash transfers that explicitly pursue a poverty-reduction objective, this paper identifies the central issues and trade-offs associated with variations in the design details of transfers, targeting and conditionality. These issues are then examined with reference to the experience of conditional cash transfers (CCTs) in nine countries in Latin America. The paper highlights the variations in CCT design and implementation and reviews the evidence of their impact on poverty and inequality, paying particular attention to estimates, where they are available, of the intended and unintended effects of separate cash transfer components. In the final section, the paper discusses the policy implications that arise from the CCT experience in Latin American countries.