empirical analysis based on Heckman and Cunha’s (2007) technology of human capital formation. In this framework, we distinguish between subcomponents of investments in nutrition, health and education and illustrate that the perception on the complementarity versus substitutability character of these investments is crucial for household expenditure decisions. Subsequently, guided by this theoretical framework, we estimate the impact of the Bolsa Fam ́ılia program on investments in child human capital.<sup>4</sup> In order to identify the causal effect of the program, we apply a Regression Discontinuity Design (RDD) exploiting an eligibility threshold in income and the number of children as exogenous variation in treatment.<sup>5</sup> Our empirical models with income as one of our forcing variables and the expenditure shares of education and health (including food) as outcome variables resemble the concept of the Engel curve. This concept was originally introduced to analyze changes in the expenditure share of food with the expansion of income [Engel, 1857, 1895] but can also be extended to other goods. We make use of this similarity by confronting the estimated treatment effect with the respective Engel curve which is informative of the expenditure behavior of households with increasing income (e.g. through a cash transfer) in the absence of conditionalities. Hence, this comparison allows us to analyze whether BFP impacts household expenditure decisions beyond a pure income effect. Even though related approaches, confronting the results of other quasi-experimental designs with Engel curves, have been used to analyze food expenditures in Colombia and Mexico, to the best of our knowledge, this procedure combining inferences based on an RDD and Engel curves has not been used before to analyze household expenditure decisions in the context of BFP or other CCTs.<sup>6</sup> This essay makes three contributions to the prevailing literature on CCT programs in general and BFP in particular. First, even though some aspects of BFP have been researched in depth, its impacts on private household expenditure decisions remains unclear. In this essay, we attempt to close this gap and provide evidence based on survey data at the household level. A

> of a strong relationship between nutrition with health and education outcomes. See Alderman et al. [2001], Alderman et al. [2006], Glewwe and Miguel [2007] and Maluccio et al. [2009]. and according to Heckman [2006] early investments are crucial.

> 4We followed the expenditure aggregation used in POF for food/nutrition; health (e.g. medical expenses, services and medication) and education (e.g. fees for regular courses and complementary activities, school materials). This procedure resulted in aggregating more than 567 items for food/nutrition; 44 items for health and 53 items for education. Further details about this aggregation are available in IBGE-POF [2012]. We also consider how constrained households are in their demand of health services and medication due to their budget constraint.

> 5The fact that individuals are not able to “precisely” control the assignment variables in this program furnishes us with a source of exogenous variation in treatment status. [Lee and Lemieux, 2010]

> 6Related approaches approaches include Attanasio et al. [2011], Angelucci and Attanasio [2013] and Beatty et al. [2011]. Attanasio et al. [2011] interacted a parametric Engel curve estimation with a combination of matching and difference-in-difference for evaluating the effect of CCTs on expenditure on food in Colombia. Angelucci and Attanasio [2013] also used a similar methodology to analyze the impact of Oportunidades on demand for food in urban area in Mexico. Beatty et al. [2011] used a regression discontinuity Engel curve specification to test the fungibility of money hypothesis for the UK Winter Fuel Payment.

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