Family grant programs reduce poverty in Brazil, Mexico

In Brazil, Bolsa Familia, or “family grants,” have caused economic inequality to drop faster than in any other country, according to Tina Rosenberg in her recent article in the New York Times.

. . . between 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians.  Poverty has fallen during that time from 22 percent of the population to 7 percent.
Contrast this with the United States, where from 1980 to 2005, more than four-fifths of the increase in Americans’ income went to the top 1 percent of earners.

How does Bolsa Familia work?

On a regular basis, payments are given to poor families in the form of electronic cash transfers directly to their bank accounts, on the condition that they meet certain requirements. The requirements are that families must keep their children in school and go for regular medical checkups, and that mothers must attend workshops on nutrition and disease prevention.  The payments are given to women, as they are most responsible for the care of children and family health decisions.  The idea behind conditional cash transfers is to not only reduce poverty but to break the cycle of poverty in the future.

Bolsa Familia was the centerpiece of former President Luiz Inácio Lula da Silva‘s social policy, and is currently the largest conditional cash transfer program in the world, though the Mexican program Oportunidades, started in 2002, was the first nation-wide program of this kind. Conditional cash transfer programs are now in use in 40 countries, (14 countries in Latin America and 26 other countries.) and, according to Rosenberg, they are the most important and effective anti-poverty program the world has ever seen.

In Mexico, Oportunidades today covers 5.8 million families, about 30 percent of the population.  An Oportunidades family with a child in primary school and a child in middle school that meets all its responsibilities can get a total of about $123 a month in grants.  Students can also get money for school supplies, and children who finish high school in a timely fashion get a one-time payment of $330.

Bolsa Familia, which has similar requirements, is even bigger.  Brazil’s conditional cash transfer programs were begun before the government of President Luiz Inacio Lula da Silva, but he consolidated various programs and expanded it. It now covers about 50 million Brazilians, about a quarter of the country.   It pays a monthly stipend of about $13 to poor families for each child 15 or younger who is attending school, up to three children.  Families can get additional payments of $19 a month for each child of 16 or 17 still in school, up to two children.  Families that live in extreme poverty get a basic benefit of about $40, with no conditions.

What do these figures mean?

A family living in extreme poverty in Brazil literally doubles its income when it gets the basic benefit. Not only has Bolsa Familia reduced poverty in Brazil, but it has also reduced economic inequality, which, makes for a healthier, more stable society. The program fights poverty by giving money directly to the poor to decrease overhead and to prevent corruption, and it provides children with better education and better health care.

In Mexico, malnutrition, anemia and stunting have dropped, as have incidences of childhood and adult illnesses.  Maternal and infant deaths have been reduced.  Contraceptive use in rural areas has risen and teen pregnancy has declined.  But the most dramatic effects are visible in education.  Children in Oportunidades repeat fewer grades and stay in school longer.  Child labor has dropped.  In rural areas, the percentage of children entering middle school has risen 42 percent.  High school inscription in rural areas has risen by a whopping 85 percent. The strongest effects on education are found in families where the mothers have the lowest schooling levels.  Indigenous Mexicans have particularly benefited, staying in school longer.

Bolsa Familia is having a similar impact in Brazil.  One recent study found that it increases school attendance and advancement — particularly in the northeast, the region of Brazil where school attendance is lowest, and particularly for older girls, who are at greatest risk of dropping out. The study also found that Bolsa has improved child weight, vaccination rates and use of pre-natal care.

According to Rosenberg, skeptics who believe that social programs never work in poor countries and very little money actually gets to the poor, “conditional cash transfer programs offer a convincing rebuttal.”

World Bank debunks criticism of family grant programs by Brazil’s elite

Unfortunately, The Bolsa Família Program is not universally accepted by Brazilian society. Criticisms are that it discourages the search for employment, and encourages laziness. (Interesting that this same criticism came from Republicans here at home about extending unemployment insurance.) The Catholic Church in Brazil maintains that the program is addictive and leads to moral decline. However, the World Bank came to the conclusion that the program does not discourage work, or the desire to get ahead. On the contrary, it finds that the program often encourages harder work because the safety net provides a basis on which to build.