Conditional Cash Transfers: A Quantitative Approach

ABSTRACT The Conditional Cash Transfer program is among the most important anti‐poverty policies worldwide. This study examines the economic effects of this program using a stylized dynamic general equilibrium model with heterogeneous agents. The analysis focuses on the program's influence on output, human capital, poverty, and income inequality, as well as its welfare implications and effects on the intergenerational transmission of poverty. The quantitative findings indicate that long‐term implementation of the Conditional Cash Transfer program significantly reduces the intergenerational transmission of poverty. In aggregate terms, welfare gains vary across agents: individuals in the lower tail of the income distribution benefit the most, while those in the upper tail experience welfare losses. Moreover, the program enhances household human capital, which drives a consistent reduction in both poverty and income inequality.