Governance, Politics, and Conditional Cash Transfer Programs Claudio Ferraz PUC Rio Second Generation of CCTs Evaluation Workshop World Bank, October 2011
Introduction Most CCTs are implemented through local governments.
Introduction Most CCTs are implemented through local governments. Local actions: choice of beneficiaries, update on beneficiary profiles, and checks on conditionality Informational advantages of local knowledge to select beneficiaries (Alatas et al 2011, Alderman 2002) Large variation in program implementation (Bardhan and Large variation in program implementation (Bardhan and Mookherjee 2006, De Janvry, Finan and Sadoulet 2010, Galasso and Ravallion 2005)
Introduction Most CCTs are implemented through local governments. Local actions: choice of beneficiaries, update on beneficiary profiles, and checks on conditionality Informational advantages of local knowledge to select beneficiaries (Alatas et al 2011, Alderman 2002) Large variation in program implementation (Bardhan and Mookherjee 2006, De Janvry, Finan and Sadoulet 2010, Galasso and Ravallion 2005) How do governance issues and political incentives affect CCT implementation and development?
Governance flow Federal government Allocate quotas Take away benefits Incentivize municipalities
Governance flow Chose beneficiaries Keep cadastro updated Check conditionality. Municipalities Federal government Allocate quotas Take away benefits Incentivize municipalities
Governance flow Chose beneficiaries Keep cadastro updated Check conditionality. Municipalities Audit agencies/ Municipal Councils Audit cadastro Social monitoring by civil society Federal government Allocate quotas Take away benefits Incentivize municipalities
Governance flow Chose beneficiaries Keep cadastro updated Check conditionality. Municipalities Audit agencies/ Municipal Councils Audit cadastro Social monitoring by civil society Beneficiaries Federal government Information Voting Allocate quotas Take away benefits Incentivize municipalities
Governance flow Check conditionality. Keep cadastro updated Electoral accountability Electoral incentives Municipalities Audit agencies/ Municipal Councils Audit cadastro Social monitoring by civil society Electoral incentives Beneficiaries Federal government Information Voting Allocate quotas Take away benefits Incentivize municipalities
Governance failures Federal Government Distribution of quotas across municipalities is based on poverty maps, but might include political criteria. Does not matter as long as it does not affect electoral results municipal elections
Governance failures Federal Government Distribution of quotas across municipalities is based on poverty maps, but might include political criteria. Does not matter as long as it does not affect electoral results municipal elections Who cuts the benefits? Local versus central government Local governments in charge of checking conditionalities and warning households that are not complying. But central government is responsible for cutting benefits.
Governance failures Federal Government Distribution of quotas across municipalities is based on poverty maps, but might include political criteria. Does not matter as long as it does not affect electoral results municipal elections Who cuts the benefits? Local versus central government Local governments in charge of checking conditionalities and warning households that are not complying. But central government is responsible for cutting benefits. Political costs => does it happen in election years? Is it homogeneous across municipalities?
Bahia 1.5 million families (0.25% cancelled)
São Paulo 1.1 million families (5% cancelled)
Governance failures- municipalities Local governments have incentives to register people in Cadastro and increase beneficiaries.
Governance failures- municipalities Camacho and Conover 2011
Governance failures- municipalities Local governments have incentives to register people in Cadastro and increase beneficiaries. No incentives to get rid of beneficiaries that don t comply with target or conditionality => political cost
Governance failures- municipalities Local governments have incentives to register people in Cadastro and increase beneficiaries. No incentives to get rid of beneficiaries that don t comply with target or conditionality => political cost How to induce local governments to chose beneficiaries appropriately in a dynamic sense:
Governance failures- municipalities Local governments have incentives to register people in Cadastro and increase beneficiaries. No incentives to get rid of beneficiaries that don t comply with target or conditionality => political cost How to induce local governments to chose beneficiaries appropriately in a dynamic sense: 1) Electoral accountability. Voters value good targeting (De Janvry, Finan, and Sadoulet 2010).
Governance failures- municipalities Local governments have incentives to register people in Cadastro and increase beneficiaries. No incentives to get rid of beneficiaries that don t comply with target or conditionality => political cost How to induce local governments to chose beneficiaries appropriately in a dynamic sense: 1) Electoral accountability. Voters value good targeting (De Janvry, Finan, and Sadoulet 2010). 2) Transparency. Public information on beneficiaries on the internet.
Governance failures- municipalities Local governments have incentives to register people in Cadastro and increase beneficiaries. No incentives to get rid of beneficiaries that don t comply with target or conditionality => political cost How to induce local governments to chose beneficiaries appropriately in a dynamic sense: 1) Electoral accountability. Voters value good targeting (De Janvry, Finan, and Sadoulet 2010). 2) Transparency. Public information on beneficiaries on the internet. 3) Pay for good practices keep cadastro updated.
Transparency
Pay for good practices In 2006 the Ministry of Social Development (MDS) created the Index of Descentralized Management (Indice de Gestão Descentralizada Municipal IGD-M). Index between 0 and 1. Based on 4 factors: Coverage of the Cadastro Único Updating cadastro- share of households with updates in past 24 months Education conditionalities Health conditionalities Show how spent resources.
Pay for good practices (cont.) Value transferred to municipalities= (IGD-M x R$2,50 x no families) + additional incentives Resources have to be spent in management of the Cadastro Único and BF program. Does the IGD measure quality of governance?
Distribution of IGD management index in 2010 State IGD RN 094 0.94 CE 0.92 PI 0.92 PB 0.92 SE 0.91 PE 091 0.91 SC 0.83 SP 0.82 ES 0.82 RJ 0.81 RS 0.80
Distribution of corruption based on CGU reports Proporção do valor da corrupção Tabela 1: Estatísticas Descritivas da Corrupção por Região Média Desvio-padrão Mínimo Máximo Número de municípios sorteados Centro-oeste 0.058 0.115 0 0.672 52 Nordeste 0087 0.087 0.100 0 0.483 174 Norte 0.036 0.101 0 0.794 74 Sudeste 0.061 0.104 0 0.509 116 Sul 0.044 0.090 0 0.562 76 Incidência da corrupção Centro-oeste 1.596 1.361 0 5 52 Nordeste 2.724 1.823 0 10 174 Norte 1878 1.878 1.767 0 8 74 Sudeste 1.388 1.443 0 10 116 Sul 1.211 1.247 0 6 76 Notas: Os números apresentados na tabelas consistem da amostra de 492 municípios fiscalizados pela CGU do sorteio 2 a 11. A proporção do valor da corrupção é dada pelo valor total encontrado em irregularidades associadas à corrupção no município dividido pelo valor total fiscalizado no município. A incidência da corrupção é dada pelo total de irregularidades associadas à corrupção no município.
Auditing The Federal Accounting Court (TCU) started to audit the beneficiaries by crossing declared income on the Cadastro Único with: SISOBI: identify dead beneficiaries. RENAVAM: identify wealth. Registry of owners of motorcycles, cars, trucks, buses fabricated after 2000 above minimum value. RAIS: workers in formal sector firm. TSE: identify elected politicians. Cadastro Nacional de Informações Sociais (CNIS) and Cadastro Nacional de Informações Sociais (CNIS) and Sistema Único de Benefícios (SUB): identify pensions.
Governance- TCU audits in 2009 19,000 car owners with values R$10,000 ($5,500) or higher. 20,601 politicians (or candidates) in 2008 election. 1.1 million families with income per capita above limit. 300,000000 dead persons receiving the benefit.
Decentralized management everywhere? Information works in settings where people know each other. Shaming if elite member receives benefit. Does not work in larger, urban areas.
Decentralized management everywhere? Information works in settings where people know each other. Shaming if elite member receives benefit. Does not work in larger, urban areas. Electoral accountability works if the main program being distributed is the BF. There is a lot at stake (De janvry, Finan, and Sadoulet 2010). True in Northeast, not so true in the South.
Decentralized management everywhere? Information works in settings where people know each other. Shaming if elite member receives benefit. Does not work in larger, urban areas. Electoral accountability works if the main program being distributed is the BF. There is a lot at stake (De janvry, Finan, and Sadoulet 2010). True in Northeast, not so true in the South. Payments for municipalities to upgrade cadastro also seems to pay out in the Northeast, not so much in the south.
Decentralized management everywhere? Information works in settings where people know each other. Shaming if elite member receives benefit. Does not work in larger, urban areas. Electoral accountability works if the main program being distributed is the BF. There is a lot at stake (De janvry, Finan, and Sadoulet 2010). True in Northeast, not so true in the South. Payments for municipalities to upgrade cadastro also seems to pay out in the Northeast, not so much in the south. Governance issues need to take into account the type of municipality.
CCTs, Clientelism, and Vote Buying We are used to worry about the sustainability of social programs-- how to convince governments to keep successful programs in place.
CCTs, Clientelism, and Vote Buying We are used to worry about the sustainability of social programs-- how to convince governments to keep successful programs in place. CCTs seem to be self-enforcing. Large increase in vote shares for incumbents that implement it (e.g. Brazil, Colombia, etc.).
CCTs, Clientelism, and Vote Buying We are used to worry about the sustainability of social programs-- how to convince governments to keep successful programs in place. CCTs seem to be self-enforcing. Large increase in vote shares for incumbents that implement it (e.g. Brazil, Colombia, etc.). Good thing reduction in poverty and inequality Median voter Good thing reduction in poverty and inequality. Median voter is happy.
CCTs, Clientelism, and Vote Buying We are used to worry about the sustainability of social programs-- how to convince governments to keep successful programs in place. CCTs seem to be self-enforcing. Large increase in vote shares for incumbents that implement it (e.g. Brazil, Colombia, etc.). Good thing reduction in poverty and inequality. Median voter is happy. Bad thing-- how to get rid of this type of redistribution once households exit poverty (1 out of 3 households in Brazil receiving BF). Political gridlock.