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Child Poverty and Cash Transfers

Author: A Barrientos and J DeJong
Date: 2004
Size: 56 pages

Summary

There is increasing emphasis on targeted cash transfers as a key instrument in reducing poverty, deprivation and vulnerability among children and their households. How can cash transfers that are targeted at children be effective in reducing child poverty? Compiled for the Childhood Poverty Research and Policy Centre (CHIP), this paper considers the role of cash transfers within social protection and discusses some developments in the provision of cash transfers to reduce poverty in developing and transition countries.

Children constitute a particularly vulnerable group in developing and transitional countries. They account for a large share of the population and, if the risk of poverty is applied evenly across age groups, also account for a large share of the poor. Their vulnerability is also apparent from non-income indicators, including access to food, water, sanitation, health, shelter, education, information and other services.

There is an emerging consensus around the view that social protection provides the most appropriate framework for addressing rising child poverty and vulnerability. Most policy interventions in this remit are either cash transfers or in-kind transfers:

In-kind benefits advantage beneficiary households by guaranteeing consumption of essential goods and services and are appealing to the non-poor because they satisfy an observed need and minimise potential misuse by poor people.
In-kind benefits are, however, demanding in terms of administration, open to capture by providers and may introduce large price and output distortions in the economy if managed on a large scale.
Cash transfers allow beneficiary households more flexibility in using resources to meet priorities, are less demanding in terms of institutional capacity and are unlikely to generate large distortions in the economy.
Concerns regarding cash transfers include money management among poor people and the extent to which transfers encourage households to change their behaviour.
Intra-household income distribution patterns may not favour children directly - resources can divert to more powerful household members, for example, male members.

The main lesson emerging from the experience of developing countries is that human development should be the overriding policy aimed at reducing child poverty.

Cash transfer programmes should be considered important elements of an integrated child poverty eradication policy based on a multi-dimensional understanding of poverty that comprises the social, as well as the material elements of deprivation.
Cash transfers are an effective tool in reducing child poverty when complemented by significant investment in the provision of basic services.
An important question is whether the poverty reduction effectiveness of cash transfers is sustainable as, in the absence of reform, inflation will gradually reduce the scope and generosity of these benefits.
Cash transfer programmes need to be designed to consider the social and cultural norms which determine how households allocate resources among different members.
Cash transfer programmes targeting child poverty have mostly been financed by loans or grants from international organisations which require medium term support as an important part of poverty reduction strategies.
Programmes should seek to involve those children who are omitted under existing frameworks yet are at greater risk; specifically orphans, street children and those living in child-headed households.

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Source: Barrientos, A. and DeJong, J., 2004, 'Child Poverty and Cash Transfers', CHIP Report no. 4, Childhood Poverty Research and Policy Centre (CHIP)
Author: Childhood Poverty Research and Policy Centre, http://www.childhoodpoverty.org/