refinement, only 32 percent of 4 year-olds in the bottom quintile are in school, compared to 72 percent in the top quintile (World Bank 2014c). At the same time, while early intervention programs targeting different risk groups may have been tried across countries, we were not able to identify any that had been rigorously evaluated or brought to national scale.

# **4.2 Household wealth and individual motivation: Providing financial and non‐ financial incentives**

Given that economic factors are one of the main reasons cited by dropouts in Central America, programs and policies to counteract the financial opportunity costs of remaining in school and increase the immediate benefits may be particular important. Programs that have been rigorously evaluated around the world generally find substantial and significant positive impacts on school participation, attendance, and persistence at the primary and lower secondary levels. At the upper secondary level, evaluations of transfer and scholarship programs find that the existence of other support programs (reducing the marginal benefit of additional cash) and the timing of transfers may be particularly important for determining impacts. The impacts of changing the timing of transfers in particular reflects in part the value of addressing individuals’ time inconsistent preferences, by facilitating savings for them to pay for up-front costs associated with re-enrolling (Barrera-Osorio et al 2011).

Every Central American country except Nicaragua currently has a conditional cash transfer program which includes education conditionalities. In El Salvador, Guatemala, and Honduras, the programs’ education conditionalities cover only youth up to either 15 years old or 6<sup>th</sup> grade (Cecchini and Madariaga 2011). In Panama, _Red de Oportunidades_ includes youth up to 17, while _Beca Universal_ includes all students in public schools and private schools charging fees below a certain amount. In Costa Rica _Avancemos_ covers all youth attending secondary school.

Targeting, coverage, and verification of conditionalities are major challenges that limit the impacts of some programs. Panama and Costa Rica’s universal scholarship programs ( _Beca_ and _Avancemos_ ) are, by their nature, not well-targeted. In Panama, the majority of _Beca_ beneficiaries are in the middle income deciles (3<sup>rd</sup> to 9<sup>th</sup> ) rather than among the poorest, while in Costa Rica, only 29 percent of eligible students in the bottom quintile reporting receiving _Avancemos_ compared to 8 percent in the top quintile (World Bank 2014c and 2014d). These programs have not been rigorously evaluated, and their impacts on school outcomes are not clear. Even welltargeted programs with strong evaluation results, like El Salvador’s _Comunidades Solidarias Rurales_ do not cover all or most eligible households: in El Salvador, fewer than 12 percent of households in the poorest quintile are beneficiaries (World Bank 2014e). Other programs providing materials, food, and other inputs to school could also be better targeted in some cases. For example, only 24 percent of students in the bottom quintile in Costa Rica benefit from the school meal program, compared to 12 percent in the fourth and 6 percent in the fifth.

Other types of incentives, such as performance-based financial rewards for students and school vouchers, have shown some promise around the world. Evaluations of merit scholarships and achievement-based financial rewards have found mixed results, and Almeida, Fitzsimons, and Rogers suggest that these interventions may be successful in increasing learning and reducing dropout at the secondary level in contexts where other constraints, such as motivation and teacher quality, are not binding and where other financial incentives are not already in place. Similarly, 23