Cyclical Liquidity Shortfalls of Cash Transfer Beneficiaries: Evidence and Implications for Transfer Timing

Conditional cash transfers (CCTs) are a widely-used anti-poverty policy that provides a regular stream of liquidity to low-income households. But if beneficiaries don't smooth consumption, they may face “consumption crunches” as their funds deplete each month. In ongoing work on Brazil's Bolsa Familia program, the authors of this proposal found that children in households nearing the end of their monthly payment cycle score lower on a high-stakes college entrance exam and are subsequently less likely to attend university.

In partnership with Brazil’s Government, this project aims to uncover the mechanisms behind these results and examine the impact of adjusting Bolsa Familia’s payout schedule. Exploiting the fact that transfer disbursement dates are randomly assigned, the researchers will generate causal evidence on monthly consumption crunches and their spillover effects on children. 

The pilot research will inform a future large-scale RCT focused on flexibilizing payout schedules to Bolsa Familia beneficiaries with a child registered to take the college entrance exam. The full RCT will measure the impacts of offering families the option of receiving a double transfer the month of the exam by shifting forward the subsequent month’s payment. The primary outcomes of interest in this evaluation are students’ performance in the standardized college entrance exam and college enrollment the subsequent year.