program in Mexico reduced economic activity by 3 - 5 percentage points among 12 to 17-yearold boys and by 2 percentage points among girls (Skoufias and Parker 2001); the Red de Proteccion Social program in Nicaragua reduced economic activity by 3 - 5 percentage points for children aged 7 to 13 (Dammert 2009), and the Programa de Asignación Familiar (PRAF) in Honduras decreased work outside the home by 3 percentage points for children aged 6 to 12 (Galiani and McEwan 2013).

De Hoop and Rosati (2014) reviewed evidence drawn from 23 evaluations of conditional cash transfer schemes and conclude that CCTs tend to lower both the extensive and intensive margin of child labor and to mitigate the effect of economic shocks that may push children into work. Moreover, most impact evaluation studies show that boys and older children experience a stronger impact of CCTs on work for pay and work outside the house while girls reduce household chores due to the transfer. Since girls are more likely to be engaged in household chores, the impact of policies on work performed by girls is likely to be underestimated if only work for pay or work for the market is considered as indicators of child labor.

Yet, there are still knowledge gaps related to cash transfers that were not addressed in the literature. First, there is scant evidence on whether cash transfer programs are effective at tackling the worst forms of child labor, such as work under hazardous conditions and long working hours. One exception is Edmonds and Shreshta (2014) who analyze a schooling promotion project for children working in the handmade, export-oriented carpet sector in Nepal. Estimates based on a randomized controlled trial show that conditional transfers covering school expenses conditional on school attendance reduced child involvement in carpet weaving, in particular for girls. The study, however, points out that the effects of the cash transfer dissipate after the program ends. The effects on children’s time allocation tend to last only for the duration of the program, there is no evidence of program effects on schooling or child labor outcomes after the program ends. More evidence about the short and long-term effects of CCTs on the worst forms of child labor is needed.

Moreover, there are indications of interaction effects between cash transfer programs and other interventions. Cash transfer programs appear to have a stronger effect on child labor when they are implemented in combination with supply-side interventions such as the provision of health and education facilities such as PROGRESA in Mexico. Their effects, however, appear to be weaker when cash transfers are combined with auxiliary interventions that affect households’ income generating strategies, as these investments may create opportunities for child labor in family work. For instance, Del Carpio, Loayza, and Wada (2016) analyze a randomized CCT in Nicaragua (Atencion a Crisis) where the transfer was complemented by a further wealth transfer to start-up a non-agricultural business. The estimates show that the program reduced farm work and household chores but increased activities related to commerce and retail among children aged 8 to 15 years. More information about the interaction between cash transfers and other interventions (including some of the interventions we discuss in this paper) would be beneficial.

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