Contrasting Mexican and Brazilian CCTs

It is thus no coincidence that Brazil, a country where the left dominated politics for three consecutive presidential terms, and Mexico, where the left until very recently was unable to win the presidency, would develop CCTs that differ significantly in the extent to which they prioritize human capital formation and poverty reduction. Progresa/Oportunidades is the product of strong policy consensus behind boosting human capital. Bolsa Família represents a compromise between those seeking to establish a UBI and an electorate that is unsupportive of unconditional social policy. It could thus be described as a “minimum income program with conditionalities” (Cotta 2009, 283).

These differing motivations manifest themselves in terms of targeting, conditionality, and stipend structure (see table 4– 1). Tellingly, although both are national in scope, Mexico’s program is limited to areas “where there is access and good capability to provide healthcare and education ser-vices” (Dávila Lárraga 2016, 8). Thus, some of the most remote and poorest parts of the country are “doubly excluded”— excluded from basic services as well as from poverty relief (Hevia 2011, 343; Yanes 2013, 68– 71). With regard to targeting, whereas Mexico’s program prioritizes minimizing errors of inclusion, Brazil’s is more focused on minimizing errors of exclu-sion. Whereas Mexico selects beneficiaries using a stringent proxy means test based on observable household characteristics, Brazil relies on self- reported incomes (Lindert et al. 2007; Soares, Ribas, and Osório 2010), a feature that the World Bank has criticized (Briere and Lindert 2005, 13). As a result, “Oportunidades has more efficient targeting than Bolsa Família, but at the price of the program covering fewer poor households” (Soares,

Ribas, and Osório 2010, 177). By 2009, Bolsa Família had more beneficia-ries than Brazil had poor people (defined as living on $4.00 a day).²¹ This remained the case until at least 2015, when coverage surpassed the share of the population living in poverty by 7 percentages points. In contrast, cover-age in Mexico has remained 3 to 4 percentcover-age points lower than the share of the population living in poverty (see fig. 4– 1).

Table 4– 2 compares conditionality enforcement across the two pro-Table 4– 1. Contrasting Mexican and Brazilian CCTs (circa 2015)

Progresa/Oportunidades Bolsa Escola/Família

Adopted 1997 2001

Initiating President’s Ideology Center- Right Center

% of Existence under Left-

Wing Government 0% 87%

Coverage (2015)¹ 24.11% 27.71%

Coverage— Poverty (2014)² – 3.39 percentage points +9.60 percentage points

Cost as % GDP (2015)¹ 0.42% 0.47%

Program Design³

Geographic Scope National (in locations with access to healthcare and edu-cation services)

National

Target Population Infants and young children

School- aged children Infants and young children School- aged children

Adults in extreme poverty with-out children

Targeting Mechanism Proxy means test Self- reported income Conditionalities School attendance (grades 3– 12)

Health visits (all household Health visits (children 0– 7 and

pregnant/lactating mothers)

Strictness of Conditionality⁴ Monitored and penalties

enforced for noncompliance Monitored but enforcement only after repeated noncompliance Stipend Structure Variable by grade and sex

One- time bonus for high school completion before age 22

Uniform, except for ages 16– 17 (receive larger stipend) Payment Schedule 10 months/year (school

stipends)

Year- round (nutrition stipends)

Year- round

Notes: ^1. As a percentage of the country’s population (CEPAL 2018); ^2. A positive sign means coverage exceeds the num-ber of poor people living in the country. A negative sign means the opposite. Poverty is measured as the percentage of the population living on less than $4.00 a day in 2014 measured in 2005 dollars at purchasing power parity (SEDLAC 2018).

As the most recent poverty data for Mexico at the time of writing was from 2014, I present data for that year. It should be noted that poverty in Brazil increased +two percentage points during 2015, reducing its result to +7.60 percentage points;

3. With the exception of assessment of strictness of conditionality, all data on program design come from Dávila Lárraga (2016) for Mexico and Hellman (2015) for Brazil; ^4. Lindert (2014). For more details, see table 4– 3.

grams. Mexico follows a stricter, more punitive, approach. Whereas in Bra-zil initial noncompliance merely leads to a warning, in Mexico it leads to the loss of that month’s benefits. In Brazil, a second violation within six months of a warning leads only to a one- month delay in benefits. It is only after a third violation that benefits are lost. Progresa/Oportunidades expels beneficiaries for the remainder of the school year if they violate condition-ality during three months or accumulate 12 unexcused absences (Dávila Lárraga 2016, 33). In practice, it is quite difficult to be entirely expelled from Bolsa Família. As Soares (2012, 327) notes, “Noncompliance with co- responsibilities is a sign that a family faces an additional vulnerability. A social worker should verify the reasons for the family failing to uphold the co- responsibilities and also help it to overcome these difficulties.”

The programs also differ with regard to stipends. Tellingly, whereas new Figure 4- 1. Mexico and Brazil: CCT Coverage as a Percent of Population Minus Poverty Rate (>$4.00/day) (1997– 2015)

Sources: Coverage defined as number of CCT beneficiaries as a share of a country’s population as compiled by the Non- contributory Social Protection Programmes Database (CEPAL 2018).

Poverty is measured as the share of a country’s population living on $4.00 or less a day in 2005 dollars at purchasing power parity as estimated by the Socio- Economic Database for Latin America and the Caribbean (SEDLAC 2018).

CCT beneficiaries in Mexico are required to comply with conditionalities for a month before receiving their first stipend, Brazilian beneficiaries receive their first payment upon enrollment (Bastagli 2008, 99). Further-more, in contrast to Bolsa Família, which operates year- round, Progresa/

Oportunidades education stipends are paid only during the 10- month school year.²² Because the opportunity costs associated with choosing school over work increase as students become older, Mexico’s stipends increase with each grade starting in third grade.²³ And, because girls have Table 4– 2. Mexican vs. Brazilian CCT: Penalties for Noncompliance

Progresa/Oportunidades Bolsa Familia Condition May not have more than four

unjusti-fied absences in a month or more than 12 in a school year.

Must maintain 85% monthly atten-dance if under 15 or 75% if 16– 17 years old.

First

Violation Suspension: does not receive that

month’s benefit. Warning: no consequences. Receives benefit without financial repercus-sion. Warning is valid for six months. If after those six months the family has a new episode of non-compliance, a new warning is issued.

Second

Violation Suspension: does not receive that

month’s benefit. Blockage: benefit blocked for 30 days, after which family receives the accu-mulated benefit (previous and cur-rent month).

Third

Violation Termination: does not receive that month’s benefit. Excluded from the program for the remainder of the school year.

First Suspension: benefit suspended for 60 days. After the 60- day period, the family receives current month benefit but without any accumulation Fourth

Violation N/A Second Suspension: If the family

con-tinues to fail to comply a second time during the six months follow-ing the last suspension, benefits are again suspended for 60 days. After the 60- day period, the family receives the current month’s benefit but without any accumulation.

Fifth

Violation N/A Termination: Benefit can only be

can-celed if family is in second suspen-sion phase; if there has been moni-toring by social assistance services, and if the conditions of noncompli-ance continued for longer than a 12- month period.

Sources: Dávila Lárraga (2016, 33– 34); Hellman (2015, 18– 19); and Lindert et al. (2007, 60).

historically received less schooling than boys, they receive larger stipends beginning in seventh grade. Furthermore, given its emphasis on human capital, Progresa/Oportunidades pays a one- time stipend to beneficiaries who graduate from high school by age 22. In line with its roots in the basic income movement, Bolsa Família pays all households living in extreme poverty an unconditional base stipend regardless of whether they have chil-dren. The CCT component provides a flat stipend for each child under 15.

Breaking with this mold, in 2008 the program began providing a more gen-erous stipend for 16 and 17 year olds. Beyond this, the program includes a supplemental subsidy determined on a case- by- case basis for families that remain in extreme poverty after receiving benefits.

Finally, the two programs differ in the extent to which they prioritize rigorous evaluation. As Morais (2017, 151) notes, “Most evaluations of Bolsa Família have been done on a small scale and quietly, whereas Opor-tunidades/Progresa set up an evaluation unit since its beginning and has made its evaluations internationally available” (see also Sugiyama 2012b, 181). The Mexican government has worked closely with researchers to eval-uate all aspects of the program’s operation and particularly its effects on human capital. In contrast, there is relatively little research on Bolsa Famí-lia’s effects on education (Morais 2017, 137). This also reflects their differing priorities. If cash transfers are envisioned as tools to boost human capital, it is necessary to prove that they in fact improve enrollment, attendance, and other relevant indicators. If transfers are envisioned as a right owed to all citizens, there is little need to evaluate their effectiveness. The transfers are justified on moral grounds.

4.4 Conclusion

Contrasting the intellectual history and design of the region’s largest and best- known anti- poverty programs, this chapter has demonstrated that not all CCTs are created equal. Policymakers have significant flexibility with regard to CCT design and can tailor programs to more heavily prioritize either human capital accumulation or poverty reduction. In Mexico, a group of neoliberal technocrats supported by a president who shared their vision created Progresa/Oportunidades, a highly targeted program with strict conditionality enforcement and variable stipends. In Brazil, policy-makers influenced by the basic income movement transformed the CCTs

they inherited into Bolsa Família, a program with broader targeting, per-missive conditionality enforcement, and (mostly) uniform stipends.

What explains the choice of CCT model? Granted, as shown in chapter 2 and earlier research (Díaz- Cayeros and Magaloni 2009; Sugiyama 2011), there is no direct link between ideology and likelihood of CCT adoption.

Yet the expansion in coverage and transformation in design of Bolsa Famí-lia under center- left leaders detailed in the previous chapter and the design differences presented in this chapter between Brazil’s CCT and that of Mex-ico, where the left had not been in power, suggest that ideology may in fact influence CCT design. The Mexican right enacted a human capital CCT.

The Brazilian left reformed the program it inherited in a basic income direction. It is quite likely that Bolsa Família would more closely resemble a UBI had the left not met with political and popular backlash against lax conditionality enforcement.

Relying on cross- national data, the next chapter systematically tests whether CCTs operated by left- wing governments cover more people than those operated by centrist and right- wing governments and whether presi-dential ideology influences program design.