The Impact of a Conditional Cash Transfer Programme on Consumption in Colombia*

Abstract

AbstractThis paper studies the impact of a conditional cash transfer programme in Colombia on the total consumption of very poor households and on its components. Our evaluation methodology involves comparing household expenditures in areas in which the programme was not implemented (control) and those in which it was (treated). We use a quasi‐experimental approach, as the Familias en Acción programme was not randomly assigned across localities, for political reasons. We condition on a large range of household‐ and municipality‐level characteristics, and also control for pre‐programme differences in the outcomes of interest using a differences‐indifferences methodology. We find that the programme has been effective at greatly increasing total consumption and its main component, food consumption, in both rural and urban areas. The programme has also contributed to improvements in the quality of food consumed, in particular of items rich in proteins (milk, meat and eggs) and of cereals. Furthermore, the programme has created redistributive effects in favour of children through expenditure on education and children's clothing, while it has not significantly affected consumption of adult goods such as alcohol and tobacco or adults’clothing.