Increasing the Demand for Education With Unconditional Cash Transfers

Sub-Saharan Africa hosts the majority of the 124 million children not enrolled in school across the globe. Education plays a key role in improving individual and social well-being, but high poverty impedes access to quality education. This cycle of poverty can be broken by reducing the burden of the financial constraints that these ultra-poor families face. Unconditional cash transfer (UCT) programs represent one approach to reducing the burdens imposed by these financial constraints that has proven to be both cost-efficient and successful. Based on the premise that people living in poverty understand how best to spend and invest their money, UCT programs provide a specified cash amount to households to supplement their income without any legal obligations or conditions. The intention of these programs is to break cycles of poverty.

In a recent study, researcher Kelly Kilburn and colleagues analyzed the impact of the Social Cash Transfer Program (SCTP), a UCT program implemented by the government of Malawi in 2006. Specifically, the authors wanted to understand whether the supplementary cash program would improve overall school enrollment and decrease dropout rates. The data collected after one year confirm that reducing the financial burden of schooling can increase school enrollment rates and attendance.

In the study, cash transfers were provided to households that were among the poorest and most vulnerable in Malawi. The cash transfer amount was significant—almost 20 percent of average per capita consumption. The size of the transfer was ultimately dependent on the size of the household and the number of potential or current students in the family. Transfers ranged from 1000 MWK ($1.37) for one family member to 2400 MWK ($3.29) for families with four or more members. In an effort by the Malawian government to increase the demand for education, families with members under the age of 30 received “top-ups.” These additional cash transfers ranged between $0.41 and $0.82 and were based on the expenses associated with different levels of schooling. Higher education was understood to cost more than lower schooling, which was typically free. Prior to the start of the program, the average household in the study spent nearly 80 percent of its income on food, compared to one percent of its income on education.

To model the relationship between the cash transfer program and child education, the researchers used household surveys to collect data from the period prior to the program and after one year of the program. The resulting model indicates that the schooling impacts after one year of the SCTP can be directly related to the additional investment in child education made by parents or guardians. Ultimately, the cash transfer reduces the burden these families face from the relatively large cost associated with sending children to school.

Through the household surveys, the study’s authors identified notebooks, stationery, school contributions and uniforms as the most common expenses. These items were regarded as vital necessities for sending a child to school prepared to learn. They found that a child would not be sent to school without these basic items. When interviewed, households cited the newfound ability to afford school supplies and uniforms as the main driver of increased school attendance for their children. Children explained that the social stigma associated with a lack of supplies or a dirty uniform prevented them from attending school prior to the implementation of the SCTP. The additional cash investment in these material items was linked, both quantitatively and qualitatively, to the improved schooling effects observed. In total, education expenditures observed after one year of the study rose by 13 percent, around 346 MWK ($0.48).

Policymakers should be aware of the potential of such cash transfer programs to positively impact schooling efforts for the millions of children living in similar situations across Sub-Saharan Africa. While the long-term effects of the SCTP have yet to be studied, in the short-term, UCT programs could offer a promising approach to increasing school enrollment and attendance. However, without addressing the stressed condition of the Malawi education system, which suffers from a lack of teachers, classrooms, and, in many instances, proper sanitation and clean water, a quality education will continue to be inaccessible to many children. Without policymakers also focusing on the supply of education, the impact of the SCTP may be overstated.

Article Source: Kilburn, Kelly, Sudhanshu Handa, Gustavo Angeles, Peter Mvula, and Maxton Tsoka, “Short-Term Impacts of an Unconditional Cash Transfer Program on Child Schooling: Experimental Evidence from Malawi,” Economics of Education Review 59 (August 2017): 63-80.

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