Report No. 20208-BR

BrazilAs Assessment of the Bolsa Escola Programs

March 15, 2001

Human Development Sector Management UnitBrazil Country Management UnitLatin America and the Caribbean Regional Office

Document of the World Bank

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CURRENCY EQUIVALENTSCurrency Unit = Real (R$)

US$1.00 = R$1.87

FISCAL YEARJanuary I - December 31

ACRONYMS AND ABBREVIATIONS

AM - AmazonasAP - AmapaDF - Distrito FederalIBGA - Instituto Brasileiro de Geografla e EstatisticasIDB - Inter-American Development BankIPEA - Instituto de Pesquisa Econ6mica AplicadaMW - Minimum WagePETI - Programa de Erradicaqdo do Trabalho InfantilPGRM - Programa de Garantia de Renda MinimaPME - Pesquisa Mensal de EmpregoPNAD - Pesquisa Nacional por Amostra de DomiiliosPRAF-BID - Programa de Asignaci6n Familiar Banco Inter-Americano de DesarrolloPROGRESA - Programa de Educaci6n, Saludy AlimentacionSAEB - Basic Education Evaluation System (Sistema de Avaliacdo da Educaqdo Basica)SM - Salario MinimoSP - Sao PauloTO - TocantinsUFIR - Unidade Fiscal de Referencia

Vice President, LCR: David de FerrantiCountry Director, LCC5C: Gobind T. NankaniSector Director, LCSHD: Xavier CollTeam Leader, LCSHD: Guilherme Sedlacek

BRAZILAn Assessment of the Bolsa Escola Programs

Table of Contents

Executive Summary ............................................................... i

1. Background of the Programs ...................................................... , 1

2. The Rationale for Bolsa Escola .................................................................. 2A. Background .................................................................. 2B. Why Bolsa Escola ............... 4

3. Selection Criteria and Targeting ................................................................. 7

4. Design and Implementation .................................................................. 12

5. Impacts-Preliminary Evidence ........................ 14

6. Evaluation Instruments .................................................................. 17

7. Monitoring Instruments .................................................................. 18

8. Political and Fiscal Sustainability ............................................................... 19

9. Expansion .................................................................. 21

10. Conclusions and Outstanding Issues ............................................................. 23

References .................................................................. 51

Boxes

Box 1.1 Program History ................................................................... 1Box 2.1 Poverty and its Many Faces in Brazil ....................................................... 2Box 2.2 The Bolsa Escola Programs are part of a Larger Trend of Poverty-Targeted Cash

Transfer Programs in Latin America ........................................................ 7Box 3.1 Targeting the Poor -The Income Means Test and Scoring System ...................... 8Box 3.2 The "Non-Covered Population" ..................................................... 1.......... 0Box 3.3 The Dilemma of the Residency Requirement .............................................. 11Box 9.1 The Child Labor Eradication (PETI) Program ............................................. 23

Data Tables

Table 1. I School Scholarship Program Coverage in Different Areas ..................................... 26Table 2.1 Selected Indicators -Metropolitan Nuclei and the Federal District 1996 .................... 26Table 2.2 Enrollment Rates for Working and Non-Working Children in Urban Areas ................ 27Table 2.3 Lag in Grade for Working and Non-Working Children in Urban Areas ..................... 27Table 2.4 Incidence of Child Labor in Urban Areas - Percentages ........................................ 27Table 2.5 Child Labor in the Federal District - 1996 ....................................................... 28Table 2.6 Child Labor, School Attendance and Overlap By Region ...................................... 28Table 2.7 Children Out of School, According to the Level of Family Income ........................... 29Table 2.8 Child Labor in the Ten Metropolitan Areas with Bolsa Escola ................................ 29Table 3.1 Basic Criteria for Benefit Concession Federal District, Belo Horizonte, & Belm .30Table 3.2 Number of Families According to the Age of Children ......................................... 30Table 3.3 The Effects of Selection Criteria on the Number of Families Covered by the Program.. 31Table 3.4 Reduction in Potential Beneficiary Families Due to Residency Requirements and

Estimates of Program's Expenditures as Proportion of Current Receipts ................... 31Table 4.1 Number of Families with 7 to 14 Year Old Children Whose per Capita Income is

Below .5 MW and Estimates of Program-Expenditures as Proportion of CurrentReceipts According to the Value of the Family Benefit ........................................ 32

Table 4.2 Fiscal Costs of Giving 1/2 Minimum Wage Based on the Number of Children in theFamily ........................................................................ 32

Table 5.1 Dropout Rates among Beneficiaries and Non-Beneficiaries (%) ............................. 33Table 5.2 Promotion Rates Estimates - 1995-1996 ......................................................... 33Table 6.1 Learning Performance of Beneficiaries and Non-Beneficiaries Selected from the SAEB

Sample Fourth Graders - 1997 .................................................................... 33Table 8.1 The Effects of Selection Criteria on the Fiscal Sustainability of the Program .............. 34Table 8.2 Program's Cost as % of Current Municipality Revenues by Level of Transfer to

Families ........................................................................ 34

Table 1-11 General Program Data ........................................................................ 37Table 2-II General Program Data for the State of Sao Paulo ............................................... 38Table 3-II Program Selection Criteria ........................................................................ 39Table 4-II Program Selection Criteria for the State of Sao Paulo .......................................... 40Table 5-II Program Requirements of the Children .......................................................... 42Table 6-II Program Requirements of the Children in the State of Sao Paulo ............................ 43

Table 1-III Time of Residence in Paranoa, D.F ............................................................... 44Table 2-III Family Composition - Paranoa .................................................................... 45Table 3-III Labor Status of Potential Beneficiaries and Non-Beneficiaries - Paranoa ....... ........... 46Table 4-Ill Average Family Income of Beneficiaries ........................................................ 46Table 5-IlI Income Per Capita ........................................................................ 47Table 6-Ill Selection Criteria of Program Applicants in the F.D. - 1995 .................................. 47Table 7-Ill Income, Family Size, and Intensity of Poverty Comparison between the Selected

Population (Beneficiaries) and the Parameter Population ..................................... 48

Appendices

Appendix I Data Tables ..................................................................... 26Appendix II Program Criteria, Design and Implementation ............................................ 35

Appendix III Evidence of Program Targeting in the Federal District .................................. 44

Annexes

Annex 1 Table 1: Scoring Criteria for the School Scholarship Program Federal District andBelem Selected Topics .................................................................. 49

This report was prepared by a team comprised of Guilberme Sedlacek, (task leader, LCSH1D), EmilyGustahsson-Wright, Nadeem Ilahi (IW) and Margarita Lannon (Program Assistant, LCSHD). Thepaper benefited frxn background papers by Alexandrina Sobreira de Moura, Lena Lavinas, and SoniaRocha.

While the report is the responsibility of the World Bank alone, we also would like t:o thank theGovernment of Brazil for its collaboration We also would like to thank Suman K. Bery (LCCWA),Ana-Maria Arriagada, Indermit Gill (LCSHD), Eliana Cardoso (LCSPE), Charles Criffin (LCSHH), P.Zafiris Tzannatos (MNSHD), Chris Patel (LCC5A), Joachim von Amsberg, Mark Thomas, DorteVerner (LCC5C), Margret Grosh, Bona Kim (HDNSP); Harry Antiony Patinos (1DNED), HaroldAlderman, Martin Ravallion (DECRG), Emmanuel Jinemez (SASED), Peter Orazemn (Iowa StateUniversity), Emmanuel Skoufias (EFPRI), Nora Lustig, Arianna Legovini, Suzanne Duryea, RuthanneDeutsh (I)B), Armand Pereira (ILO-Brazil), Reiko Niimi, Arabela Rota, Sizue Imanishi (UNICEF),Cristovam Buarque (Pres. NGO Missio Crian9a), Ricardo Paes de Barros, Lena Lavinas, Sonia MariaRocha (IPEA), Alexandrina Sobreira Moura (Sectma - PE), and Francisco Ferreira (PUC RJ-Brazil)for their inputs and comments. Finally, we would like to thank the many individuals in Brazil whocontributed tine, infomation and insight.

EXECUTIVE SUMMARY

i) The Bolsa Escola programs are poverty-targeted social assistance programs thatgive cash grants to poor families with school-age (7-14 year old) children. Thesegrants are given on the condition that the children attend school a minimum number ofdays per month. These programs began in 1995 at the municipal level in Campinas andthe Federal District of Brasilia. By 1999, there were 60 programs in operation in variousurban municipalities. Over the same period, and with design similar to the Bolsa Escolaprograms, two major Federal Programs (FGRM-Fundo de Garantia da Renda Minima andPETI-Programa de Erradicacao do Trabalho Infantil) have been instituted. By the end of2000, PETI's coverage had reached close to 400 thousand children, while FGRM had acoverage estimated at 2 million households. Recently, the Brazilian Government hasmoved to scale-up (to reach all municipalities with the worst human developmentindicators by 2002) and integrate the FGRM and PETI cash-grant initiatives under onecoherent program, the Alvorada Program. These programs have four objectives. First,they hope to increase educational attainment among today's children and thus reducefuture poverty. Second, by restricting the grants to the current poor, the programs aim toreduce current poverty. Third, by requiring children in beneficiary households to haveminimum attendance in school, the programs aim to reduce child labor. Last, animplicit objective is that by providing income support to poor families, they act as apartial safety net-i.e., they prevent these families from falling further into poverty inthe event of an adverse shock.

ii) The rationale for these programs is best understood by considering the currentpicture of poverty in Brazil. Poverty is pervasive in Brazil, and one of the strongestcorrelates of current poverty is low education. Thus, improving the education of childrenis an effective way of preventing future poverty. Enrollment of children is high, butchildren enter the school system late and attend infrequently; leading to slow progressionthrough school. The average school-going child in Brazil is behind his counterparts inother Latin American countries. One reason for the slow progression is the poor qualityof education services and another is child labor. The majority of workin.g children areenrolled in school. Working children tend to fall behind much faster than those who donot work. As educational attainment and child labor are intimately associated withpoverty, there is a strong rationale for programs like the Bolsa Escola. But the focus ofthis report on the demand size programs does not imply ignoring supply side constraints.Additional improvements to the access and quality of education would complement thenecessary demand-side intervention provided by Bolsa Escola. Supply-side interventionsin education are especially critical in the poorer areas of Brazil.

iii) The Bolsa Escola programs have widespread support and they fit well intoBrazil's larger social protection and poverty reduction strategies. Because theyexplicitly target the poor, the Bolsa Escola programs have an edge over others (such asschool feeding programns and other untargeted subsidies) that do not. At the same time,

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by focusing on future poverty (children) they complement other programs for povertyreduction that focus more on current poverty (such as provision of basic services). TheBolsa Escola programs have generated strong commitment within and outside thegovernment. The local schools are important stakeholders and various agents of civilsociety are actively involved in monitoring and enforcement of these programs. Thispromises better success for these programs than other social protection programs.

iv) The programs have sound criteria for selection and targeting. Withinmunicipalities, the programs target the poorest localities first. For the selection ofbeneficiaries, the programs go beyond a simple income means test. They use a scoresystem which comprises various indicators of the family's living standards. Two issuesmerit attention. First, there is potential for improvement in the score system, especiallyin customizing it by municipality. Second, since these programs are implemented at themunicipal level, there is no mechanism to ensure that they target the poorest regions inBrazil. Therefore, there is a role for the federal government to encourage the installationof these programs in the poorest municipalities.

v) Preliminary evidence (available from the program in Brasilia) suggests that theprograms have been reasonably successful in targeting. First, leakage rates (i.e., thenon-targeted benefiting from the program) have been low. A comparison of thebeneficiary population with the parameter population (those limited by selection criteria)and non-beneficiaries (those that do not meet program criteria) reveals that the programbeneficiaries are indeed the poorest. However, under-coverage rates (the targetedpopulation that is missed by the program) have also been high. This is partly due to theweak financial capacity of the poorest municipalities.

vi) Preliminary evidence also points to improvements in education and povertyoutcomes, but evidence on reduction in child labor is inconclusive. First, schoolattendance is higher and dropout rates are lower for beneficiaries. More beneficiarychildren enter school at the right age compared to their non-beneficiary counterparts.Second, as a consequence of good targeting, the program reduces the income gapbetween beneficiaries and non-beneficiaries, implying short term poverty reduction.However, it has been difficult to ascertain the effects on child labor. This is partlybecause in Brasilia, where the evaluation was undertaken, there is little child labor.

vii) A design-related issue that requires attention is the need to reach the "non-covered" population. Through their design the programs create two types of "non-covered" groups. First, because the programs explicitly focus on poor families withchildren of school age, they tend to exclude poor families with only pre-school andadolescent children. Second, most of the programs impose a minimum residencyrequirement on beneficiaries, ostensibly to discourage in-migration. By doing so,however, they can end up excluding the poorest. The exclusion of these groups raisesconcerns about equity. The report argues that for the benefit of the latter group, theresidency requirement should be reduced to one year. For the former groups, this reportsuggests two options. First, other programs for pre-school children and adolescents couldbe run in tandem with the Bolsa Escola Programs. Second, the role of the Bolsa EscolaPrograms could be expanded along the lines of the Progresa program in Mexico to

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include poor families with pre-school and adolescent children and catering to the needs ofthese groups such as providing nutrition support along with school grants. Anyexpansion should ensure the programs still stay rooted in current administrative set up(such as pre-schools) so that compliance with the program (minimum attendance) ismonitored.

viii) The level of the cash transfer needs to be determined carefully. There is a widevariation in the cash transfer level between municipalities which leads to the question ofwhich is the most appropriate level. There are three issues to consider: First, it should beclarified what the cash transfer is meant to do-does it compensate beneficiary familiesfor lost wages, or does it pull them up to the poverty line? Since the objective chosen islikely to result in different levels of the cash transfer, there is a need to go back toprogram objectives and determine which one is paramount. A conservative approach,and that suggested by this report, would be to link the cash transfer directly with theforegone earnings of the child. The second issue is that the programs currently use a cashtransfer that does not vary by recipient. There may be gains from tailoring it tosubgroups in the population. For instance, older children are likely to have a higheropportunity cost of going to school and it may be better to have the cash transfer increasewith age. This is essentially the design of the Progresa program in Mexico. Third, someof the Bolsa Escola programs give one cash transfer per family rather than per child.This is likely to reduce the incentive of families with many children from participating inthe program. We suggest that the cash transfer should be based on the number ofchildren in the family. While attempts to tailor the cash transfer will be financiallyefficient, it is also likely they will add to the cost of administration, since it is expensiveto identify and monitor different subgroups. However, more evaluation is necessary tospecify the optimal level.

ix) The Bolsa Escola Programs should not be seen by local governments assubstitutes for investments in schools. Poor educational attainment in Brazil is aconsequence of both demand failure (poverty) and supply constraints (poor schoolquality). While school quality is not a major issue in Brasilia-where Bolsa Escola wasfirst implemented-it is likely to be important in other urban areas, particularly the poorrural ones. Hence, local governments should not see the Bolsa Escola. programs asreplacing other education-related interventions. This report recommends that the BolsaEscola programs follow the example of other programs in Brazil (PETI) and in the region(Progresa in Mexico) that provide explicit financial support to local schools.

x) Perhaps the biggest consideration in the successful expansion of these programs istheir fiscal affordability. Brazil today is highly decentralized. Not only are programssuch as the Bolsa Escola implemented at the municipal level, but their financing alsocomes from local sources. This has created a particularly perverse problem in that thepoorest municipalities are the ones that need these programs the most (since they have ahigher incidence of poverty) but are unable to afford them (since they also have low localrevenues). The calculations in this report reveal that except for the richest urbanmunicipalities, the program would amount to a fairly large burden on local finances.There is evidence even today that in some of the poorer municipalities where theprograms are being implemented, shortages of funds have resulted in under-coverage of

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the deserving population. There are two ways of resolving the financing problem. One isto alter the selection criteria or the size of the cash transfer to reduce the size of thebeneficiary population or the arnount of support respectively. The other is to top-offlocal deficit through financing from the federal government. This report recommends thelatter because changes in benefit size will ultimately compromise the effectiveness of theprogram. In the extreme, such adjustments would start affecting the effectiveness ofthese programs in reaching their objectives. Federal transfers are perhaps the best option.However, we recommend that to preserve the incentives of local municipalities toefficiently run the programs, there should be a local share that each municipality mustpay.

xi) These programs are only partial safety nets-they protect the structurally poorduring crises and equip the next generation with risk reducing human capital.There are two ways in which these programs serve the purpose of a safety net. Economiccrises ca seriously affect the health, nutrition and educational outcomes of the extremepoor. Thus, by supporting the structurally poor, these programs provide them with anassured source of income and smooth income shocks. Second, higher levels of educationreduces vulnerability to future economic shocks. Hence, by encouraging human capitalinvestments, these programs better prepare the poor for future shocks. These programsact as a partial safety net because they do not cover the transitory poor-those who arenear poor now but can fall into poverty as a result of an economic shock. There is a needto explore how to design complementary programs to address the needs of the transitorypoor.

xii) The conclusions of this report have implications for the debate of programexpansion. Based on existing evidence, this report finds that the Bolsa Escola programsare appropriately designed and well administered. They have a role to play in the largersocial assistance strategy of Brazil. They are likely to remain successful because theyenjoy broad support in the government as well as in civil society. However, the concernsraised in this report here should be kept in mind when replication or expansion of theseprograms is being considered. Some have been discussed above. First, adjusting the sizeof the cash transfer or the selection criteria in order to make the programs affordable, cancompromise the effectiveness of the program. Second, the administering municipalitiesand the federal and state governments need to agree on cost-sharing for the programs. Arelated issue is that the federal government needs to make its own calculations toprioritize geographical areas where interventions are needed most so as to remainconsistent with the objective of reaching the most needy in Brazil. Third, there is a needto either expand the existing Bolsa Escola programs to include the "non-covered"populations or serve them with other complementary programs. Fourth, the Bolsa Escolaprograms should complement rather than substitute investments in school quality. Fifth,since the programs act only as a partial safety net, there is a need to examine how toreach the transitory poor through complementary programs. Last, but not least, there is aneed to carry out a broad-based and systematic evaluation of these programs. Theexisting evaluation, which only covers the Federal District of Brasilia, is not enough. Aformal evaluation, such as the one for Progresa in Mexico, should include control andexperiment groups that are tracked over time so that it is possible to make a scientific

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judgment on the programs' effectiveness.' Only with a proper evaluation can the trueeffectiveness of these programs be determined.

xiii) Programas Alvorada and PETI. Recently, the Brazilian Government- has moved toscale-up and integrate separate cash-grant initiatives financed by the federal government(FGRM-Fundo de Garantia da Renda MInima and PETI-Programa de Erradicagilo doTrabalho Infantil) under the Alvorada program. This program will seek, over the next fewyears, the gradual implementation of a Bolsa Escola program in poor mun.icipalities withthe worse indices of social development in country. This policy initiative represents amajor step forward in program design and fiscal commitment, it integrates within onecoherent program both preventive initiatives (Bolsa Escola/FGRM with two millionbeneficiaries in 2000) and the remedial child-labor eradication program (PETI, with fourhundred thousand beneficiaries in 2000). Program Alvorada will permit the Governmentto address design and implementation issues hindering the effectiveness of the FGRMprogram - very low cash transfer level, complex benefit design and target exclusion ofmany poor municipalities in the Northeast and North. By building on thecomplementarity of existing conditional cash transfers to the poor, and improvingcoordination with educational initiatives aiming at universalizing basic education, it hasthe potential do significantly increase targeting and effectiveness.

'Progresa (1999) Evaluaci6n de Resultados del Programa de Educaci6n, Salud, y Alimnentacion.-PrimerosAvances.

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1. BACKGROUND OF THE PROGRAMS

1.1 The Bolsa Escola programs are poverty-targeted social assistance programs thatgive cash transfers to poor families with school-age children. In return for thetransfer, the beneficiary families agree to keep their children in school.Specifically, the cash grants are given on the condition that children will attendschool at least 90 percent of the required number of school days per month.

1.2 The four central objectives of the programs are to:

* Increase educational attainment and subsequently reduce poverty in the longterm.

The main objective of the programs is to increase educational attainmentamong current school-age children (7-14). The ultimate hope is that highereducational attainment will lead to higher future incomes, and therebydecrease the chance that these children will grow up to be poor

* Reduce short-term poverty.By restricting the grants to families that are poor now, the programs aim toreduce current poverty.

* Reduce child labor.By requiring children who benefit from the program to have minimumattendance at school of 90 percent, the programs aim to reduce the timechildren would have available to engage in labor, thus reducing the incidenceof child labor among the target group.

* Act as a potential safety net.Though the programs are not a full-fledged safety net at this point, they dohave the potential of being one. By providing income support to poor familiesthe programs prevent such families from falling further into poverty in theevent of a negative shock such as an economic recession.

BOX 1.1

Program History

* Since the early 1970's, minimum income programs have been proposed as a poverty alleviation tool inBrazil. The Bolsa Escola programs are part of a larger government social assistance strategy.

* In 1995, the first of these types of programs was implemented by the local governrient in Campinas,as an additional component of the social assistance network. At about the same time it was alsoinstalled in the Federal District (Brasilia), as largely an educational program.

* By November, 1998 there were more than 60 programs in operation (four of which were by states:Amapa (AP), Amazonas (AM), Distrito Federal (DF), Tocantins (TO); and the rest by Municipalities.Table 1.1 in Appendix I lists the coverage of the programs in three metropolitan areas).

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2. THE RATIONALE FOR BOLSA ESCOLA

2.1 This section assesses the current situation of poverty, school attendance and childlabor at the national level in Brazil as well as in those metropolitan areas whereexpansion is being considered. In addition, this section considers alternativetypes of social protection programs in Brazil. It demonstrates why the BolsaEscola can easily complement some of these programs and is perhaps moreappropriate than some.

BOX 2.1

Poverty and its Many Faces in Brazil

* Brazil has a poverty headcount ratio of 23%, which is high for a middle-income country.* There is a strong inverse relationship between education level and poverty rates in Brazil.

About 90% of household heads have not graduated from high school, and 74% have not completed 4Ihgrade.

* School attendance of children is negatively associated with their poverty status. Brazil lagsbehind other countries in Latin America in children's grade-for-age.

* Child labor is common-about 14.9% of children in the 7-14 age group work. Child labor is directlyassociated with poverty-the incidence of child labor is 20% in the bottom quintile of the incomedistribution, but only 5% in the top.

A. Background

2.2 Poverty is pervasive in urban Brazil, especially in the North and Northeast.The overall incidence of poverty in Brazil is approximately 22%. For the purposeof this report, it is better to focus on the incidence of poverty in the urbanmetropolitan areas where the Bolsa Escola programs are in place or are beingproposed. Table 2.1 in Appendix I presents the distribution of the poor in the tenexamined cities by income as well as by access to basic services. There are widedisparities in the distribution of urban poverty along regional lines-i.e., betweenthe North/Northeast and the Center South. In the poor Northeast, averagemonthly per capita family income is as low as R$254 (Fortaleza) and R$285(Recife). In the more affluent Center South, it is as high as R$1,563 (PortoAlegre) and R$1,589 (Curitiba). At the poverty line of 1/2 of the minimum wageper capita, the incidence of poverty is the highest in the Northeast, such as inSalvador (23%) and Fortaleza (22%), and the lowest in Southern Curitiba (3%).

2.3 School enrollment is high, but children enter the school system late andprogress slowly. Most children in urban Brazil today are enrolled in school.Household survey data (PNAD, 1998) indicate that enrollment rates are as high as

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96%, with little difference between boys and girls (Table 2.2 in Appendix I).Enrollment is not a problem, but low quality of education, late entry into schooland progression through the school system are the main reasons for loweducational attainment among Brazilian children. Only 62% of the childrenentering the school system in the Federal District-a relatively mnore wealthymetropolitan area-are of the right age foe their grade, the rest are old for theirgrade. As many as 8% enter the school system four years late. Partly from lateentry and partly due to irregular attendance, Brazilian children tend to fall behindwhile progressing through the school system. Calculations from the householdsurvey reveal that the educational attainment of children in urban EBrazil is only60% of what it should be for their age (Table 2.3). In other words, a typical 13year-old who should have completed 6 grades (assuming he/she entered school at7 years of age) is currently in 4th grade-behind for the age by about 40%. Boystend to lag behind more (45%) than do girls (38%). Part of this gender disparity ineducation lags may be explained by child labor, in which boys are over-represented.

2.4 The vast majority of working children are enrolled in school but child laborcontributes to slow progression (due to repetition), and hifh drop out rates.The incidence of child labor in urban Brazil is 9% (Table 2.4). It is twice as highfor boys (12%) than for girls (6%). The vast majority (80%) of working childrenare enrolled in school (Table 2.2) and a large proportion of these children workmore than 15 hours per week (Table 2.5). Children who work exhibit a lag inattainment that is 18% greater than that of those who do not workc (Table 2.3).Among other factors, this is due to the direct time that labor takes away fromschool and school work, the physical and mental exhaustion and the health effectsthe child may experience from working. Thus, even though child labor is notincompatible with school enrollment, work seems to slow progression through theschool system (Table 2.6).

2.5 Both education and child labor are intimately associated with poverty. Whilechild labor and low educational attainment are problems in themselves, they arealso intimately associated with poverty in Brazil (Table 2.7). First, there is astrong negative correlation in Brazil between education levels and poverty. About90% of heads of poor households have not graduated from primary school and74% have not completed fourth grade. The key missing asset among poorhouseholds is human capital-education. Even though attendance differences aresmall between poor and non-poor children, children in poor households havemuch lower grade attainment than those in non-poor ones. Child labor is alsoclosely associated with poverty. The incidence of child labor in households in thebottom 20% of income distribution is 22%, compared to only 6% in the top 20%.The problem of poverty and child labor is more stark in rural than in urban Brazil(Table 2.8).

2 Child labor is defined here as work that children do, both for wages as well as on the family farm orenterprise. It should be noted that most of the work girls do consists of household chores, an activity thatgoes largely unaccounted for in the PNAD survey data.

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B. Why Bolsa Escola?

2.6 If the quality of the education system is inadequate, then why not just givemore money to the schools? It is indisputable that many Brazilian schools,especially in poorer areas, have low quality of education as well as poorinfrastructure. It may be argued that the levels of educational attainment in Brazilare low because of this. In part, this is true. Nevertheless, there is another majorfactor contributing to the low levels of educational attainment in Brazil. Asdiscussed above, both child labor and education are intimately associated withpoverty. For many poor families, the only way to achieve a minimum standard ofliving is to keep their children out of school. Thus, for these families theopportunity cost of a child attending school-i.e., the foregone potential incomeof the working child-could outweigh the potential benefits received througheducation. As discussed above, many children both work and attend school(80%) leading to an average lag of 18% in grade attainment. This indicates that itis not necessarily only the quality of education that is the cause of low attainment,but that it may also be a fact that children are both working and attending school.This constraint is best tackled by providing a monetary incentive to attend school.But arguing in favor of demand-side interventions such as the Bolsa Escola doesnot imply ignoring supply side constraints. Additional improvements to theaccess and quality of education would complement the necessary demand-sideintervention provided by Bolsa Escola. This supply-side intervention is especiallycritical in the poorer areas of Brazil.

2.7 Bolsa Escola is more appropriately targeted and effective than food subsidyanti-poverty programs. Brazil has a number of government programs in placethat provide assistance to poor families by giving food or food-related subsidies.These programs aim to overcome nutritional deficiencies among the poorconsidering that such nutritional deficiencies may contribute to poverty. Someexamples are Milk Distribution ("Milk is Health") and Basic Food BasketDistribution Programs. These programs suffer from a number of drawbacks.First, they do not provide the transfer in cash, but rather give specific goods.There is consensus today that when it comes to poverty alleviation cash transfersare better at improving the welfare of individuals than in-kind ones. Second,subsidies on food products tend to distort relative prices in the economy, which inturn can have negative implications for food production and marketing. Third,these programs tend to be poorly targeted and administered. Poor administrationis largely due to the fact that these programs, unlike the Bolsa Escola, are notanchored in the existing education administration system.

2.8 Bolsa Escola can act as a complement to other anti-poverty programs inBrazil which focus on basic services. Since access to basic services, such assewage facilities and water, is an indicator of general well-being, this access is acrucial component to the poverty reduction equation. Infrastructure investmentsthat provide basic services are essential not just for poverty reduction but also forthe welfare of the population-for instance, they may have positive healthexternalities. However, evidence shows that even when such basic services have

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been provided, poverty often remains an issue. Anti-poverty programs in Brazilsuch water and sanitation, lack a stronger link to long-term poverty reduction.The Bolsa Escola programs have the potential to tackle short-termn poverty byproviding a cash grant as well as its long-term determinants-low educationalattainment. By breaking the poverty cycle through increased educationalattainment, Bolsa Escola is able to combat long term poverty. Government policyshould therefore think of the provision of basic services as a complement topoverty targeted programs such as the Bolsa Escola. Both types of programs areneeded.

2.9 Bolsa Escola has broad support among civil society. Though minimum incomeprograms have only recently begun to be used as a nationwide tool for povertyalleviation in Brazil, the pros and cons of these types of prograrns have beendebated since the early 1970's. In fact, political scientists, sociologists andeconomists have centered many discussions over the years around the idea ofthese types of programs. Over the last several years, the Brazilian Governmenthas shown an increased commitment to poverty reduction throngh increasedsocial spending and the support of minimum income programs. The increasingdemand for these programs over time demonstrates the positive momentum thatthese actions have achieved. The Bolsa Escola programs are consistent with thegovernment goal of improving protection of poor children through demand-sideprograms that address inequalities in the educational system. The participation ofsocial assistance organizations and schools emphasizes the pledge of manystakeholders in attempting to attain the objectives set out by the Bolsa Escolaprograms. In several of the cities in which Bolsa Escola is in place, socialworkers play a crucial role in the selection of beneficiaries. Schoolteachers andadministrators are committed to handling the monitoring component of theprograms together with municipalities.

2.10 These programs are only partial safety nets-they help protect thestructurally poor during crises and equip the next generation with riskreducing human capital. Safety nets address vulnerability. The Bolsa Escolaprograms are not a complete safety net, but they do provide protection for somesections of the population. There are two ways in which they do this.

2.11 The Bolsa transfer cushions family income during a crisis. There are twotypes of vulnerable groups-those who are below the poverty line-thestructurally poor-and those who are above it, but can fall below it when ashock hits-the transitory poor. The Bolsa Escola programs target thestructurally poor (i.e. if times are normal then these would also be the structuralpoor). The structurally poor are particularly vulnerable to both economic andidiosyncratic shocks. Existing evidence from the region confirms this. In Brazil,recent episodes of economic downturn and upswings have particularly exposedthe poor to even worse outcomes (World Bank, 2000-M. Thomas). Thus, thefact that these programs promise to continue to provide transfers to the currentpoor means they mitigate the risks the poor face.

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However, in their current design, these programs do not cover the transitory poor.This is because the transitory poor are the current non-poor and thereforetheoretically, invisible to these programs targeting mechanisms. They couldpotentially cover the transitory poor if they capture this group after it has slumpedinto poverty, however the targeting mechanism would have to be adjusted(beneficiary selection is based on proxies for household permanent income).

2.12 Education and health are good risk reducing assets.During economic crises in Brazil, the least educated experience the greatestvulnerability (World Bank, 2000-M. Thomas). Further, when a crisis hits, oneof the coping strategies of the current poor is to pull their children out of schooland put them in work to supplement family income (see Duryea, 1998; Ilahi1999). While such strategies do reduce some of the short term costs of a crisis,they create long term vulnerability. This is because they reduce the educationalattainment of children, who then are more likely to be vulnerable to economicrisks in the future. Hence, by providing cash transfers to the poor conditional onschool attendance, these programs increase educational attainment among futuregenerations and hence reduce future risks.

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BOX 2.2

The Bolsa Escola Programs are Part of a Larger Trend of Poverty-Tar,geted CashTransfer Programs in Latin America

The prototype of the Bolsa Escola-the program in Campinas-began in 1995. This program andsubsequent ones in Brasilia, D. F. and other cities, as well as the Federal Program for the Eradicationof Child Labor (PETI) have become models for the rest of Latin America. Mexico replaced itsuntargeted tortilla subsidy with Progresa, a variant of the Bolsa Escola Program with the objective ofproviding poverty-targeted social assistance. Honduras has installed the Programa de Asignaci6nFamiliar (PRAF-BID II). Similarly, Ecuador's Beca Escolar is considering programs closely modeledalong the same lines and Nicaragua is on the verge of installing its own demand-side intervention ineducation, health, and nutrition.

Since most of these programs are too recent for evaluation, it is premature to pass judgment on theirsuccess. One that is fairly advanced in implementation is Progresa. Some preliminary evidenceshows its promise.

Mexico's Progresa: While Progresa closely resembles its predecessor in Brazil, it also has distinctdifferences in design. First, since Progresa (unlike Bolsa Escola) is a federally designed andadministered program, it uses nationwide geographic targeting to identify the pooresit areas where theintervention is to be made first. The process is based on a geographic poverty map. This allowsProgresa to achieve optimal targeting within Mexico (the poorest are served first) and improvesadministration, something the Brazilian programs cannot claim. Second, while Bolsa Escola requiresonly one kind of good behavior from the program beneficiaries-that their children attend schoolregularly-Progresa also requires that mothers in beneficiary families follow prescribed pre- and post-natal care and that all family members visit a health clinic a minimum number of times per year. Italso provides food supplements to families in extreme poverty. Third, while Bolsa Escola gives astandard cash transfer to all families, Progresa's cash grant increases with the grade in school-recognizing that the opportunity cost of children's time increases as they grow older. Furthermore, itoffers higher transfers for girls than for boys attending secondary school. This is to ensure that genderlags in secondary enrollment are reversed.

Progresa has demonstrated success in improving educational attainment. As part of an on-goingevaluation being conducted by the Intemational Food Policy Research Institute (IFPRI), T. PaulSchultz (1999) has used a difference-in-difference approach to systematically test the effects ofProgresa on education using experiment and control groups. His findings are that primary enrollmenthas increased in Progresa regions by about 2%, from a high baseline of 92% enrollment. Secondaryenrollment has risen in Progresa areas by 5%, from a baseline of 65%.

3. SELECTION CRITERIA AND TARGETING

3.1 This section discusses the criteria established by the program for the selection ofbeneficiaries based on the objectives of poverty reduction and increased schoolattaimnent. In the selection of potential beneficiaries two issues are considered.First, the criteria must ensure that the programs reach the intended beneficiaries;i.e., poor families with school-age children. Second, the criteria must ensure that

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the number of potential beneficiaries is narrow enough to be sustainable for theprograms -an issue that will be discussed further in section 8. Appendix IIdescribes in detail the actual selection criteria used in the programs in place today.

3.2 The programs target geographically within municipalities. Even though thechoice of the municipalities themselves is not based on any larger (Brazil-wide)notion of geographical targeting, the programs have good targeting within regionswhere they operate. This is achieved in two ways: geographical as well asincome-based targeting. First, the programs start with the poorest neighborhoodswithin a municipality. Beneficiaries are then chosen in such neighborhoods basedon an income means test or the score system (discussed in Box 3.1). Thisapproach is cost-effective and ensures that the poorest localities in themunicipalities take higher priority.

BOX 3.1

Targeting the Poor -the Income-Means Test and Scoring System

Given the programs' objective of reducing poverty through increased educational attainment, the targetpopulation includes those deemed relatively most impoverished in each area. Initially, an income-meanstest was used to identify the beneficiary group. This method took into consideration the characteristicsestablished by the program-that families have children in the 7-14 age group, they earn less than one halfof minimum wage and, in some cases, they have a minimum amount of residency in the area. The incomemeasure had difficulties. One was that a significant portion of family income of the poor in Brazil isderived from informal occupations and unregistered sources. This income is extremely hard to measureaccurately.

For this reason, a scoring system was developed. The score, which is demonstrated in Table I in Annex 1,considers various aspects of the potential beneficiaries' living standards. In addition to income, thecharacteristics considered include housing status, engagement in the labor market, educational attainment,presence of durable goods in the household and number of children in the household, to name a few.Beneficiaries are selected based on the number of points they receive. In each area or federated unity, as inthe case of Brasilia, each category may take on a different weight. In Brasilia, for example, priority isgiven to families with children below fourteen years of age who rent their homes. A heavy weight isassigned to dependents in the household while less weight is given to the different types of labor marketengagement.

Some issues remain outstanding. First is the weight assigned to bi-parental versus single parenthouseholds. Since the latter group tends to live under more adverse conditions, it makes sense to give moreweight to this group. Second, there should be a differentiation between those who have a regular source ofincome and social guarantees and those who do not and consequently are engaged in activities that do notprovide a reliable income flow.

Overall, while it is clear that the scoring system provides an appropriate method for targeting given thecircumstances surrounding the income of families in these areas, tailoring the scoring system to each areaby weighting according to specific characteristics would probably improve the targeting method.

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3.3 Is half a minimum-wage a reasonable poverty line for each mnunicipality?This is the per-capita income level below which the families are eligible toparticipate in the program.3 This is also a key parameter in determining thesustainability of the program. Because socioeconomic conditions and local pricescan vary substantially between municipalities, it may not be appropriate to use asingle poverty line across the board. It may be better to start with a nationallydetermined poverty line (half of minimum wage) and to then adjust it for spatialvariation in prices.

3.4 The selection criteria established by the programs narrovws the targetpopulation to the intended beneficiaries, but is this too narrow? Theunderlying objectives of the prograrns-to provide income support to poorfamilies with school-age children-allow the program to naturally narrow thepopulation of potential beneficiaries. When the program was originally designed,the three selection criteria of the program were: a) poor households; b) children7-14 years of age; and c) a minimum residency of 5 years (such as in Brasilia butnot in other metropolitan areas). Tables 3-II and 4-II in Appendix II show theselection criteria for the other municipalities. The number of families in the areasaccording to age, shown in Table 3.2 in Appendix I, allows us to obtain the totalnumber of potential beneficiaries if only the age criteria were used. Usinghousehold data from the PNAD, Table 3.3 simulates how each one of the threeconditions narrows the group of those who are eligible for the program. Recallthat economic affordability of the program is the most important reason forhaving a small target population. Imposing the condition of "children in the 7-14age bracket" on poor families substantially reduces the number of eligiblefamilies. The overall drop in the ten cities would be about 50%. This drop wouldbe greater in the larger metropolitan areas of Rio de Janeiro and Sdo Paulo (morethan 50%) than in the cities of the Northeast-Belem and Recife. When theresidency requirement (see Box 3.3), is added to the selection criteria-ostensiblyto reduce the incentive for in-migration of poor families-the numbers of eligiblehouseholds can drop substantially. This drop is much greater in the CenterSouth-an area that has been a magnet for in-migration in recent years-than inthe North or Northeast. Box 3.2 discusses the issue of whether or not the strictselection criteria create a "non-covered population" in terms of age and theresidency requirement.

3 Note that this criteria does not vary by municipality.

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BOX 3.2

The "Non-Covered Population" the Brasilia Case

The three proposed eligibility criteria for selection into the programs leave two main types of "non-covered populations." This box identifies what these two populations are and how large they are likelyto be in the ten metropolitan areas.

. By targeting poor families with children of school going age the programs overlook poor familieswithout children in that age bracket. This is a potential problem since poor families with veryyoung children-under 6 years of age or over 14-are also deserving of poverty-targetedinterventions. However, as is discussed elsewhere in this report there are two reasons why it isbest to leave this group out of the Bolsa Escola programs. First, the Bolsa Escola are rooted in theschool system and so the compliance (i.e., school attendance) of children of school-going age iseasy to monitor. Second, very young children have specific needs such as post-natal care anddaycare which are best addressed by a separate program (see Pies de Barros and Mendonqa,1999). Table 3.2 shows that the non-covered population in this category is not small. Of thefamilies that have children in the 0-6 age bracket, as many as 57% do not have children in the 7-14age group, implying they will not benefit at all from the program.

. By restricting to a subset those who have been residing in the city for a minimum 5 in years ormore, the program further "excludes" those families that are poor and have children of school-going age but are recent migrants. Table 3.3 in Appendix I shows that the imposition of the 5-yearresidency requirement reduces the number of eligible families by as much as 21%. This dilemmais discussed further in Box 3.3.

. While this report recognizes that these populations are "excluded" it is important to note that it isnot as a result of design failure of the programs. The programs intentionally select the specifiedgroups based on the trade-off between the objectives and fiscal sustainability of the programs.

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BOX 3.3

The Dilemma of the Residency Requirement

In the three metropolitan areas where they operate, the Bolsa Escola programns require thatbeneficiaries must have been residents in the metropolis for more than the minimum period ofresidency. This period varies from two to five years. The reason for this requirernent is that theprograms wish to avoid creating a rural-urban migration problem. Since a sizable proportion of the in-migrants to urban metropolises are poor families with young children, the program designers fear thatif they do not use a time of residence filter, the programs will start attracting the poor from the outlyingareas. In the extreme, the programs would ultimately result in benefiting only the recent migrants. Inorder to minimize the chance that the programs create an incentive for rural-urban migration and tomake them more affordable (by trimming the numbers who qualify), the programs choise to install theminimum residence requirement.

The discussion above notwithstanding, a 3-5 year residency requirement severely curtails the ranks ofthe deserving poor in these cities. In fact, this filter is biased against the poorest who live in the citiesnow (and who did not in-migrate after hearing about the program). In that sense, the time of residencefilter may be seen as counter-productive.

How severely does the program restrict the qualifying population? Table 3.4 in Appendix I shows thepercent reduction in qualifying families when the time of residence filter is used in selectingbeneficiaries in the ten cities. The overall reduction is about 20% and there is little difference betweenthe three and five year requirement The filter trims a much larger proportion of the qualifying familiesin the cities of the Center South (41% drop in Sao Paulo and 81% in Brasilia) than in the Northeast (5-6% in Recife and 6% in Belem). This is understandable since the rich and fast-growing cities of theCenter South are most likely to have attracted migrants in the last 3-5 years.

How can the program designers resolve the dilemma? It may be best to use a shorter residencerequirement-say one year. This would dent the incentive outsiders have from in-migrating andbenefiting from the program immediately. At the same time, the programs would not "over kill" bydropping a large number of current poor who came into the city 1-5 years ago. One problem wouldstill remain. Relaxing the residency requirement would undoubtedly increase the costs of theprograms. The answer here is that it would swell the ranks of the qualifying families a lot more in theCenter South than in the poor Northeast. Therefore, the biggest increase in costs would result in thericher cities of the Center South and not in the Northeast. As is obvious from Table 3 4, local financesin the latter are adequate to meet the increased demand on program funds.

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4. DESIGN AND IMPLEMENTATION

4.1 This section discusses issues related to program design and the practicaldisbursement of the Bolsa (cash grant) to beneficiary families. The most pertinentelements of this discussion are why school investments should complement cashgrants; why giving cash is appropriate; how the amount of the Cash transfer oughtto be set; and to whom it should be given.

4.2 The Bolsa Escola programs should be seen as complements to, not substitutesfor investments in schools. The poor record of educational attainment in Brazil isa consequence of both demand failure (i.e. the poor cannot afford to send theirchildren to school) and supply constraints (parents consider the quality of schoolsto be inadequate). The Bolsa Escola programs are primarily demand-sideprograms. This is partly because school quality is not an issue in Brasilia-whereBolsa Escola was first implemented. However, it is likely to be important in otherurban areas, particularly the poorer ones. Thus local governments should not seethe Bolsa Escola programs as replacing other education-related interventions.Rather, the Bolsa Escola cash grants should be given in tandem with investmentsin local schools. This is essentially the approach of similar programs (PETI inBrazil and Progresa in Mexico).

4.3 Giving cash is better than giving other forms of goods or services There aretwo main reasons why programs that want to alleviate poverty are better offgiving cash than some form of goods or service. Given that increasing householdwelfare is the ultimate objective of a poverty alleviation program, a cash transfer,as compared to an in-kind transfer such as a school meal, best increases householdwelfare because it leaves to the household how to spend the money. One counterargument is that if the welfare of vulnerable groups within the household were anissue-such as the well-being of children-then it may make more sense to givean in-kind transfer specifically to the children rather than give cash to thehousehold head. However, a sizable body of literature on the intra-householdallocation of resources demonstrates that earmarked transfers to specificindividuals in the household do not always result in achieving their objective.4

This is because intra-household allocations depend on the bargaining power ofindividuals and until the sharing rules are known, little can be said about thesuccess of such transfers in increasing the welfare of specific individuals in thehousehold. Second, non-cash transfers end up distorting the market for the goodsor services in question. For instance, if a school milk program replaces the cash-based Bolsa Escola then the government would either have to take over theproduction and/or marketing of milk, or use a subsidy to ensure adequate supplyfor the program. Furthermore, it would become very difficult to exclude the non-

4 Haddad, Hoddinott and Alderman (1997).

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beneficiary students from the beneficiaries. Thus, non-cash-based transfers comeat a higher cost to society than a simple cash-based transfer.

4.4 How much should the cash transfer be? It is important from the standpoint ofbenefits as well as costs that the level of the cash grant ought to be set at the rightlevel. There are two issues related to the optimal level of the cash grant. First isat what level it should be set, given program objectives. Given the facit that theseprograms have multiple objectives, with no clear weighting ascribed to each one,it may be difficult to arrive at with a precise level of the cash grant. In otherwords it is not obvious theoretically whether the program should pay a cash grantthat brings the families up to the poverty line, or a grant level that compensatesfamilies for the opportunity cost of participating in the program (i.e., theopportunity cost of the child's time, time cost of visiting the health celnter, etc.). Ifthe primary objective of the program is to reduce poverty then the grant should beadequate to bring the family up to the poverty line. If the primary objective is tohave children in school then compensating families for the opportunity cost ofchild time as well as other indirect school costs may be best. However, it shouldbe noted that since households themselves ascribe a positive value to theeducation services these programs provide, the optimal level of cash grants shouldnecessarily be below whatever is determined as the economic optimum.

4.5 Should the cash transfer vary by age or gender? The theoretical discussionnotwithstanding, there are practical issues regarding the timing or the level ofcash transfer that need attention. This is because not everybody who participatesin the program is identical and therefore, there may be gains in efficiency to behad if the program were to alter the timing or level of the grant to account for thisheterogeneity of participants. There are two examples that illustrate this. First,the analogous program in Mexico, Progresa, changes the level of the grantaccording to the school grade and gender of the child. This is based on theexplicit understanding that families with older children face a higher opportunitycost than those with younger children so the grant for children in secondaryschool would have to be higher than for those in primary school. Also, the female-male differential in enrollment in Mexico widens at the secondary school level soa greater incentive is given to girls to attend. The Brasilia version of the BolsaEscola program deposits the equivalent of one minimum wage into a savingsaccount in the name of the beneficiary child each year. The child is allowed towithdraw the money once he/she completes 8th grade. The idea here is to alterthe timing of the grant to create an incentive to complete secondary school.

4.6 The benefits of customizing the cash transfer to participants ought to beweighed against the costs. While tinkering with the cash grant level, to tailor it tothe various sub- groups in the population makes economic sense (from anefficiency standpoint), it also adds to the cost of administering the program, sinceadditional criteria have to be checked when making the cash transfer to the familyor when the banking system has to be involved. If these marginal administrativecosts are not large then it would make sense to tailor the grant to the different

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subgroups in the program. However, if these costs are large then it may be betterto leave the cash grant scheme simple.

4.7 The cash transfer should be based on the number of eligible children in thehousehold. Currently in many of the programns, a family qualifies for the cashtransfer if it has at least one school-going age child and the level of the cashtransfer does not increase with the number of eligible children in the household.So a family with three children in the 7-14 age group would receive the same cashtransfer as a family with just one child. This structure of the transfer lowers theincentive for the family with many children to participate in the program since theopportunity cost of putting three children in school is much higher than that ofkeeping one in school. This defeats the purpose of the program. One solution isto base the cash transfer on the number of eligible children in the family. Sincethe average number of children in eligible families is under two, giving one cashtransfer per child rather than one per famnily would improve the incentive forfamilies with many children to keep all of them in school. Further, if suchchanges were accompanied by a reduction of the amount of the cash transfer (perchild) from one minimum wage to one-half the minimum wage, such a structureof the cash transfer would improve fiscal sustainability by reducing the overallcosts of the program by about 12%, with sizable reductions in costs in theNortheast (about 10%) (see Table 4.2).

4.8 The cash transfer is (and should be) given to the mother of the children.Evidence from around the world shows that a transfer to the woman rather thanthe man in the family, will result in more appropriate use of the funds.Additionally, it ensures the participation of the mother in the child's developmentand education and gives the woman some financial responsibility, which hasobvious implications for gender equality. The Bolsa Escola programs require thatthe cash be transferred to the mother of the beneficiary household, and this is thecorrect approach.

5. IMPACTS-PRELIMINARY EVIDENCE

5.1 This section evaluates the performance of Bolsa Escola along the lines of itsobjective-reaching the poorest subset of the population in the chosen areas;increasing education; reducing short and long-term poverty, and reducing childlabor. Since a full-fledged evaluation of the impacts is planned but has not yetbeen conducted, this section provides a preliminary assessment based on evidenceavailable from program data as well as that available from indirect sources.

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5.2 The programs have been well targeted to the poor families with children ofschool-going age and to the poorest regions within the metropolitan areas.5

In the absence of data on experiment and control groups, only indirect evidenceon targeting is available. The evidence from Brasilia suggests that the programthere has been well-targeted (Saboia and Rocha, 1998), meaning that the actualbeneficiaries of the program were the intended beneficiaries based on theselection criteria established by the program. Appendix III demonstrates in detailthe evidence supporting the success of the program in capturing the intendedbeneficiaries or "parameter population." By comparing the characteristics of bothbeneficiaries and non-beneficiaries (see Tables 1-III through 7-111 in AppendixIII) it is clear that the program did capture poor families with children of school-going age. Part of the reason for the success in reaching the intended beneficiariesis the program's use of a score system--a quasi-means test that allows the programto select beneficiaries by "scoring" their observed characteristics and then using acutoff point to choose the most needy (see details in Section III, Box 3.1).Another reason for the targeting success of the program is the manner in which itwas expanded. In Brasilia, the program was implemented gradually by startingfrom the poorest neighborhoods and then expanding to less and less poorneighborhoods. This method of expansion uses a mix of geographical targeting(neighborhoods) and within a geographic area, targeting based on a quasi-meanstest (household score).

5.3 While many municipalities have been successful in reaching all of thepotential beneficiaries, on average the programs have not been successful inreaching all potential beneficiaries. Referring back to Appendix II, it may benoted that although the programs demonstrated appropriate targeting, as describedabove, the programs on average were not able to serve nearly 43% of theparameter population (the population established by the selection criteria). This isnot a question of "non-covered population" due to the selection criteria, however.These families were actually captured in the measurements based on the selectioncriteria but for some reason they were not served. Nevertheless, it is important tonote that 21% of the programs were able to serve 100% of the selected (orpotential beneficiaries) which demonstrates that many of the progranis have beensuccessful in reaching all of the intended beneficiaries.6 The reason why someprograms served less than 100% of the selected beneficiaries was financial-theprogram costs with 100% service may just were too high.

5.4 The programs show improved educational outcomes. Four outcorne indicatorsof education can be used to assess the effectiveness of the programs in the tenmetropolitan areas-drop out rates, age at first entry, promotion and learning.Since a minimum school attendance rate of 90% is required for a family tocontinue to receive the cash grant, the program directly forces high attendance

5 Appendix III discusses in detail the evaluation of the programs' ability to target appropriately.6 The mean of potential beneficiaries over actual beneficiaries was approximately 57%, the median was53% and the mode was served 100%(12 out of 55 served 100% -where three values were excluded due toincomplete data).

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and low dropout. First, a comparison of program data (experiment) and schoolcensus data (control group) reveals that drop out rates among beneficiaries aremuch lower (0.4% in 1996) than among non-beneficiaries (5.6%) (Table 5.1).7Second, a larger proportion of the children in beneficiary households enter theschool system at the right age than do their non-beneficiary counterparts. Third,children in beneficiary households do exhibit a higher promotion rate (80%) thantheir counterparts in non-beneficiary households (72%) (Table 5.2). Finally, therewas little difference between the beneficiary and non-beneficiary groups inlearning outcomes. It should be noted, that the recent controversy relating to theimpact of the Brasilia Bolsa Escola program suggests the urgent need of acompetent third-party evaluation. It should also be pointed out that all thecomparisons cited in this paragraph are based on uncontrolled comparisons andthat a more systematic evaluation that controls for the fact that beneficiaries arenot a random sub-group of the population may give better indications of programsuccess.

5.5 There is evidence of immediate poverty reduction. The Federal DistrictProgram had remarkable success with respect to its income distributioncomponent. Because of relatively low poverty incidence coupled withcomfortable public finance conditions, it has been possible to transfer a monthlyminimum income benefit to 25 thousand families amounting to less than one percent of the local current receipts.8 Transferring a minimum wage - R$130 inNovember 1998 - to families whose average household per capita income isR$44.35, significantly improved living standards. Considering half a minimumwage as poverty line, the income gap ratio is decreased from .41 to .04 as theaverage per capita income is raised to R$72 because of the monetary transfer.9That is, the aggregate monthly transfer would be sufficient to raise all familieswho receive the benefit to the poverty line level. It is noteworthy that per capitaincome among beneficiary families varies from zero to values above the proposedcriteria of half minimum wage. As a consequence, after the same monetarytransfer to all families, some attain per capita income above the half minimumwage poverty line, while others still remain below this parameter. Since thetransfer corresponds to almost 40%, the most obvious result is the immediateincrease in family income and private consumption (Rocha, 1999). Evidence islacking in the other areas and should also be examined for any robust results ofpositive poverty impacts.

5.6 The evidence on the effects on child labor is inconclusive. The elimination ofchild labor is another measure of program success. Since school hours are shortchild labor can be concurrent with school attendance. The programs' direct effect

7 Note that the difference in dropout rates between beneficiaries and non-beneficiaries obtained in this wayprovides an upper bound on the actual difference since the former group consists of children from poorfamilies who are more likely to drop out compared to a randomly chosen child. In other words the trueeffect of the program would be obtained when a randomly selected child is given the cash transfer and theirdrop out rate compared with that of the rest of the population.8In 1997 the payment of benefits corresponded to 0.7% of current receipts.9 Estimates based on data from families receiving the benefit in July 1998.

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on reducing child labor is to be investigated directly from program data, which isdifficult since families who receive the benefit will probably deny using childlabor.

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6. EVALUATION INSTRUMENTS

6.1 How to measure program success in increasing educational attainment. InSection III, a number of indicators of educational attainment were discussed. Thequestion is, if given the choice of using an ideal indicator of education attainmentin order to evaluate the success of the program, which would it be? Attendanceis certainly not appropriate. This is because the program monitors on the basis ofattendance and it drops those families in which children fall below a minimumacceptable level of attendance (90%) over a given period. Thus, after the fact, allprogram participants would show adequate attendance. Proficiency test scoressuch as the SAEB would be ideal (Table 6.1 in Appendix I). 10 Ultimately we areinterested in whether children are learning more as a result of the program, not ifthey are attending regularly. Given the lack of a well functioning testing system,this is difficult at this point but may be an option in the future. Progressionthrough the school system-as captured by promotion-may be the bestavailable indicator of educational outcomes. The child completing grade eight isa potentially appropriate measure of promotion that is being used in Mexico'sProgresa Program.I

6.2 How to measure program's success in reducing current poverty. Povertyreduction is usually measured by per capita-based consumption measures such asthe headcount-i.e., the proportion of the population below a poverty line. Acomparison of regions where Bolsa Escola interventions were made and regionswhere they were not would provide the contribution of the programs to povertyreduction. However, since the poorer regions are more likely to attract BolsaEscola investments, it is important to compare changes in poverty (difference-in-differences) rather then levels between program and non-program regions.Further, economic growth could also contribute to poverty reduction and if thisgrowth differs by program and non-program regions then this would bias thepoverty reduction effects ascribed to the program even under a difference-in-difference approach. Controlling for growth and other exogenous factors wouldprovide a cleaner assessment of the program's impact on poverty reduction.

1° Note that the difference in dropout rates between beneficiaries and non-beneficiaries obtained in thisway provides a lower bound on the actual difference, since the latter group consists of children from poorfamilies who are more likely to drop out compared to a randomly chosen child. In other words, the trueeffect of the program would be obtained when a randomly selected child is given the cash transfer and theirdrop out rate compared with that of the population."1 However, it suffers from two potential drawbacks. First, automatic promotion has been implemented insome grades in Brazil. Second, the school system may artificially inflate the promotion rate if it stands tofain resources on the basis of how well program participants are doing.2 Note that the difference in dropout rate between beneficiaries and non-beneficiaries obtained in this way

provides a lower bound on the actual difference, since the latter group consists of children from poorfamilies who are more likely to drop out compared to a randomly chosen child. In other words, the true

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6.3 How to measure programs' success in reducing child labor. While assessingthe programs' impact on education by monitoring student performance isrelatively easy given the structure of the program, it is more difficult to measuretheir impact on child labor reductions. Ultimately this has to be done at a broaderlevel by not using control and experiment groups, but rather modifying theexisting household survey data (such as the PNAD) to do a baseline and then apost-program evaluation. If the modified household survey included a questionon whether the household benefited from the program, then after controlling forendogenous placement a difference-in-difference in the incidence of child laborbetween participant and non-participant households would demonstrate the effectof the program.

7. MONITORING INSTRUMENTS

7.1 Participation of locals and stakeholders ensures good targeting. Participationof local members of the community, because each of the programs is local,ensures that the programs reach the intended beneficiaries as well as ensuring thatmonitoring occurs at various independent levels. In Beldm, for example, theprograms are supported by the participation of social assistance institutions.Social workers play a significant role in the family selection procedure in thatthey visit households and help families fill out information forms. Increasedparticipation of civil society would improve the monitoring process.

7.2 How the transfer takes place. The Secretary of Education makes monthly cashpayments in each Municipality. The requirements for receipt of the payment are aminimum monthly school attendance of 90 percent. If the child does not meet theattendance requirement for the month, the monthly transfer is not made to thefamily. The payment is resumed once school attendance is deemed satisfactory.The Accounts Tribunal of the municipality carries out an audit.

7.3 Enforcing school attendance. There are a few weaknesses in the system whichshould be addressed. The first is the difficulty in ensuring that children actuallyare attending school. While the school has the responsibility of keeping track ofattendance and sending the records to the Municipal Secretariat of Education,there may be some discrepancy between schools in the measure of absenteeism.The results depend on how strict controls are in each school, characteristics ofindividual children and the type of labor in which children may be involved ifthey are working and attending school. This may be addressed through greater

effect of the program would be obtained when a randomly selected child is given the cash transfer and theirdrop out rate compared with that of the population.13 However, it suffers from two potential drawbacks. First, automatic promotion has been implemented insome grades in Brazil. Second, the school system may artificially inflate the promotion rate if it stands togain resources on the basis of how well program participants are doing.

19

participation of members of civil society and families to ensure greaterconvergence between program goals and implementation. Additionally,independent spot checks besides the attendance checks carried out by a third partywould help to ensure accurate measurement of absenteeism. The second issue isthat in those areas where labor is very seasonal, families may pull their childrenout of school during the high work season and then send them to school for theremaining months. As the system stands, while children may be out of school fora significant portion of the year, during the off-season the families receive thecash transfer since the child is attending school regularly during those months.Since promotion to a higher grade is not necessarily based on ability, the resultwill clearly be a lower level of performance. Thus, a more appropriate manner toensure consistent school attendance would be to require an additional minimumnumber of months of attendance per year. A final suggestion is an annual re-registration to the programs to reinforce program requirements and goals.

7.4 The programs cannot enforce a reduction in child labor. Children work bothfor wages and as unpaid family workers. Even though the reduction of child laboris an expressed objective of the program, it is difficult for the program to monitorif children in beneficiary households are indeed not working. Good standing inthe program does not require that children be pulled out of work, only that they beattending school at a minimum rate which may be compatible with working.Thus, although the program has no mechanism with which to monitor child labor,the hope is that the cash grant and increased education will provide an incentive tonot work.

8. POLITICAL AND FISCAL SUSTAINABILITY

8.1 This section discusses issues related to the sustainability of the programs.Political sustainability is ensured through the active support of the government inimproving the social protection system in Brazil and its commitment to minimumincome guarantee programs such as Bolsa Escola. The fiscal sustainability of theprograms is heavily dependent upon program affordability. Data show that inareas where the programs are needed the most, they tend to be the least affordableby local governments.

8.2 The programs promise high political sustainability. Brazilian governmentshave been increasing their spending on the social sector over the last severalyears, showing an increasing commitment to poverty reduction and programssuch as Bolsa Escola. Primary education programs as well as other types ofdemand-side programs have received increased financing, demonstrating thewillingness of the government to address inequalities in the educational system.The financing of programs addressing basic health and primary education aresome examples of this commitment. In addition, the government has made it a

20

priority to: a) improve targeting of its social assistance programs; b) improvequality; and c) reduce the gap in the social protection system.

8.3 Fiscal sustainability is the weakest in poorest municipalities and it may beimproved somewhat by establishing more strict selection criteria. Eachselection criteria helps to reduce the size of the eligible population (see section 3for details). If we use all three criteria-poverty, children school age, and aresidency requirement-the cost of the programs is about 3% of current receipts(Table 8.1 in Appendix I). However, this average for the ten largest metropolitanareas masks large inter-city differences. For instance, program costs are a muchlarger share of current receipts in Salvador (19%), Fortaleza (16%) and Belemand Recife (both 12%) than in Brasilia (0.2%) and Sao Paulo (0.90%). There aretwo reasons this. First, poverty is much higher in the Northeast, so the pool offamilies that satisfy selection criteria is much larger than in the Center South.Second, the cities of Northeast are poorer than those in the Center South. As aresult their fiscal revenues are much smaller than those of their counterparts in theCenter South. Not surprisingly then, the programs are the least affcrdable in theareas where they are needed most.

8.4 Should affordability be improved by reducing the size of the cash transfer?.Governments may be tempted to make the programs affordable by cutting the sizeof the transfer. Table 8.2 shows how program affordability increases as the cashtransfer is cut to 1/2 minimum wage per family and then to 1/4 minimum wage.With a transfer of V2 minimum wage, the average program cost is 1.4% of currentreceipts. With 1/4 minimum wage this is further lowered to less than 1%. Ofcourse vast differences between cities still remain, with the program costs beingabove 3% in Northeast and minimal in the Center South. But cutting the size ofthe cash transfer runs the risk of jeopardizing the effectiveness of the programs ininducing child enrollment and reducing poverty. The optimal size of the transfershould be set taking into account either the opportunity cost of the child's time, orthe transfer necessary to reduce poverty (see section 4). Any gain from trimmingthe cash transfer has to be weighed against the cost of not meeting the goals of theprograms.

8.5 The federal/state governments should top off the shortfall. Tinkering with thedesign of the programs (e.g., changing the level of the cash transfer or changingthe poverty line), would make them more affordable, but it would also defeat thepurpose. Thus keeping the current targeting and transfer design of 1the programsrequires that the federal government "top off" with transfers to the poorestmunicipalities. The question is under what formula should these transfers fromthe federal government come? The answer is that the federal government canequalize the load of the prograrn on the municipalities. In this way everymunicipality pays up to a local share of the program and the remainder is taken upby the federal government. This formula would mean that there would be nofederal transfer to municipalities where program costs are less than the maximumlocal share. On the other hand, where program costs are very high ('e.g., 19% inSalvador), the federal government would pay most (for instance 17%) of the

21

costs. Since the poorer municipalities are also likely to need help with theirschool system, some of the transfer from the federal government can come in theform of "in kind" transfers for improving the school system. A federal financedprogram would also have the advantage to minimize problems related tomigration from covered to uncovered areas. Regardless, it is important to keep inmind that in order to maintain the stake of the municipalities in the program, thefederal government should not pay the full cost.

9. EXPANSION-WHERE, WHY AND HOW?

9.1 The success of the Bolsa Escola in targeting and delivery in the cities and stateswhere it exists raises the question whether the programs should be expanded toother areas. Ideally, given the programs' objectives of targeting the poor andconsidering that the poorest in Brazil live in rural areas, it would make sense toargue that the programs be expanded to rural Brazil. However, there already isanother initiative in place that specifically focuses on rural Brazil, and itsparticular nature of low education and high child labor (see box 9.1). Theexpansion of the Bolsa Escola into poorer municipalities may require very highsubsidies from federal or state governments to ensure fiscal sustainability.Therefore, for now, an expansion of Bolsa Escola to the ten largest metropolitanareas makes sense.

9.2 Why should the program be expanded first in the large urban andmetropolitan areas?

* These areas have a large proportion of Brazil's poor. According to recentcalculations, one-third of Brazil's poor live in these ten cities-in line with thepopulation share of these cities in the national population. These cities have,over time, become less attractive places for rural migrants partly as a result ofshort-term economic cycles. Nevertheless, they still hold close to 9.5 millionpoor.

* The supply of schools is better in urban than in rural areas. Both the quantityof school supply (number of seats per child) and the quality of education arebetter in these urban metropolitan areas compared to the rural ones. Thus,pure demand side programs such as the Bolsa Escola make more sense herethan in rural Brazil. In rural areas, any demand side intervention in educationwould have to be accompanied with a strong supply intervention eitherdirectly in the school system or through an "extended school day" (JornadaAmpliada) as is being done currently with the PETI program in rural Brazil(see Box 9.1).

22

* These cities are administratively well-equipped to handle the program.Poverty-targeted education grant programs like the Bolsa Escola requireefficient administrative machinery to ensure proper implementation. This iswhere the metro areas, which are also the capital cities of their respectivestates, have an edge in terms of the administrative machinery already in place.

* The government is committed to supporting these types of programs. Thesupport for the Bolsa Escola programs in these metropolitan areas is evident.The results of the government's efforts to increase social programs are duelargely to the increased demand and the generation of positive feedback fromsociety that supports the notion of expansion.

9.3 However, any expansion must account for the fact that the lessons fromBrasilia are "non-representative". The richest evidence on the Bolsa Escola isfrom the Federal District. However, when thinking of expanding to other urbanmetropolitan areas, one has to be careful in recognizing that part of the reason forthe program's success in Brasilia has to do with the following factors:

• Brasilia has a low incidence of poverty. Thus the proportion of eligiblefamilies (according to program criteria) in the population of Brasilia is low.This is not the case elsewhere, especially in the cities of the North andNortheast.

- Because of low eligibility and high revenues, the program imposes a lowerfiscal burden on Brasilia than on other cities.

* The quality of schools in Brasilia is very good. However, this is not alwaysthe case in other municipalities. Thus there is a need to supplement the BolsaEscola with a supply side intervention in these municipalities.

9.4 Program affordability and sustainability must be considered whenexpanding to other areas. The discussion above, as well as that in Section 8 onsustainability, brought to light some points which are crucial to the expansionphase of the programs to other areas. It is evident that in those areas where theprograms are needed the most (the poorest areas and rural areas), they are theleast affordable. If the programs were to be expanded to these areas, there areseveral options which might attempt to reduce program costs. First, the selectioncriteria for the programs could be altered to narrow the number of potentialbeneficiaries. Second, the amount of the cash transfer could be reduced to lowerprogram costs proportionate to percentage of current receipts. When expanding torural areas, which given poverty levels, should be a priority for the ]3olsa Escolaprograms, the amount of the cash transfer could be set at a level similar to that setin the rural PETI program (Box 9.1) of R$25. Overall, however, it is notsuggested that program design be altered drastically to make the programaffordable as this risks affecting the program objective of poverty reduction.Therefore, one crucial policy option is federal/state subsidies to balance the lack

23

of resources and funding in the poorer municipalities. This may be done by thegovernment equalizing the load of the program on municipalities through amonetary transfer and/or through in-kind transfers to improve the school system.

BOX 9.1

The Child Labor Eradication (PETI) Program

The PETI program was initiated in 1996 in rural areas of Brazil and has managed to reach 977municipalities in 27 states and has provided assistance to 396,546 working children in 2000. The PETIprogram is scheduled to reach close to 800,000 children by 2002.

* The program has objectives similar to those of Bolsa Escola, including increasing educationalattainment and reducing poverty, though its goal is to simultaneously eradicate the "worst forms" ofchild labor. Child labor in rural areas accounts for 60% of overall child labor, which in 1999 was14.9% of all children ages 10-14 in Brazil.

* The program first chooses geographical areas throughout Brazil with the greatest incidence of theworst forms of child labor. Among the worst forms of child labor are work in sisal and cassavaprocessing, charcoal production, mining, quarrying, and the collection of sugar cane, tobacco andcotton.

* The program provides stipends of approximately R$25 per child to poor families who have childrenages 7-14 which is given to the mother. The stipend is conditional on the promise that the children willattend school, participate in after-school activities and agree to not work. The program also transfers tolocal govermments R$20 per child to finance after-school activities (Jornada Ampliada) and ensure thatchildren do not both attend school and work.

* The advantage of the PETI program over other types of minimum income guarantee programs is that itallows for the reduction of the target population, making it more feasible in areas with less thansufficient funds. Also, this program is advantageous because it is anchored in the school system alongwith having the support of civil society (NGOs, rural worker unions, etc.) for selection as well asmonitoring.

* A qualitative assessment of the PETI program in Pernambuco (Moura, 1999) revealed the following.a) There was little evidence of mis-targeting; b) participating children were found complying with theminimum days of school attendance and were not working; c) the after-school program (JornadaAmpliada) seemed to be functioning well.

10. CONCLUSIONS AND OUTSTANDING ISSUES

10.1 According to the preliminary evidence available, the Bolsa Escola programs areeffective and appropriately targeted, considering the extreme level of poverty, loweducational attainment and the child labor situation in Brazil. In addition, theprograms evaluated were shown, through the provision of cash grants, toimmediately improve living conditions among the poor. Because the Bolsa Escolaprograms provide monetary incentives to attend school, the demand for educationis expected to rise and the programs are able to combat long-term poverty at itsroots. These outcomes must, however, be evaluated in the long-run. Given thesuccessful momentum demonstrated by existing evaluations of the Bolsa Escolatype programs, an expansion to other areas of Brazil is recommended and could

24

be complemented by supply-side improvements such as school quality andinfrastructure programs.

10.2 There are several outstanding challenges which must be considered in order tomost effectively expand the programs to other areas of Brazil. The main issueswhich we have discussed in this paper are: a) the necessity to solidifying designissues such as the size of the cash grant; b) the need to ensure programaffordability and sustainability; c) the need for other complementary programswhich reach the "non-covered population"; d) the need for complementarysupply-side investments in schools; e) the need to reach consensus on the finalprogram objective ;and f) the inherent critical need for a formal impactevaluation.

10.3 The first issue of solidifying the design of the programs, includes twc elements: a)improving the programs' capacity to select the appropriate beneficiaries; and b)optimally setting the level of the cash transfer. As discussed in this paper, overallthe program has been very successful in targeting the intended population.Nevertheless, the selection process using scoring system must be tailored andmade flexible to allow for differences between municipalities in which theprograms are implemented. Appendix II demonstrates that the programs do infact differ in their selection criteria, which indicates this flexibility (though thedifferences between the municipalities are perhaps even more significant). Theability of the programs to reach as many of their potential beneficiaries aspossible should also be reflected in the setting of the cash transfer. The optimallevel must be one which at a minimum compensates families for the foregoneearnings of the child.

10.4 In the expansion of the programs, the two design issues above are absolutelycrucial and directly linked to the affordability and sustainability of the programs.Clearly the programs must be affordable fiscally in the municipalities in whichthey are implemented. Program affordability is affected by the selection ofbeneficiaries (number), the amount of the cash grant as well as the existinginfrastructure in the municipality. As discussed in the sustainability section ofthis paper, the selection criteria help in reducing the size of the eligiblepopulation. For example, using the three basic criteria can reduce the cost of theprogram to 3% of current receipts in some areas. However, in other areas suchSalvador and Fortaleza -the costs are still high.. As pointed out, usiIng Brasilia asa model is hardly appropriate considering that there the costs are only equal to0.2% of current receipts. Another factor to consider in attempts at reducingprogram costs is the size of the cash transfer. Again though, there are some citieswhose costs are still too high for the program to be affordable. It is clear that inareas where a program is most needed -the poorest and rural areas- it is the leastaffordable. The trade-offs in terns of selection of the population and setting ofthe cash transfer are inherent given the multiple objectives of the programs.However, attempting to change the program design in terms of selection criteriaand cash transfer size to address this factors, runs the risk of jeopardizing programeffectiveness. We therefore would recommend, for rural areas, criteria whichresemble that first established by the PETI program. We do not recommend

25

sacrificing program effectiveness in order to reach a larger population, a potentialsolution is to call for federal/state subsidies to supplement those poorermunicipalities.

10.5 The third issue is the need for complementary programs that reach the "non-covered population" such as poor families with very young children. Byrestricting itself to poor households with children of school-going age, the BolsaEscola program tends to overlook an equally deserving pool-poor families withchildren under 6 years of age or over 14. This neglect raises questions about whyit does not include the latter group and to what extent the program covers the mostneedy. There are essentially two reasons why this is so. First, the main reason forthe success of Bolsa Escola is that by anchoring itself in the existing public schoolsystem, it is able to avoid the higher administrative costs that come with amassive poverty-targeted program. Unfortunately, this means that the programcannot monitor the attendance of children under 6 or over 14. Second, childrenunder 6 (preschool children) have distinctly different educational anddevelopmental needs than do those in the school going age. It may be best toaddress the needs of the former by installing a separate poverty targeted programfor poor families with very young children. Existing programs for pre-schoolchildren in Brazil (Pdes de Barros, 1999) may provide the best example of whatthis special group needs.

10.6 The fourth issue is the need for complementary investments in schools. TheBolsa Escola Programs should not be seen by local governments as replacementsfor other education-related intervention investments in schools. Poor educationalattainment in Brazil is a consequence of both demand failure (poverty) and supplyconstraints (poor school quality). This report recommends that the Bolsa Escolaprograms follow the example of other programs in Brazil (PETI) and in the region(Progresa in Mexico) that provide financial support to local schools.

10.7 The fifth issue, of reaching consensus on the final project objectives refers to thequestion whether programs such as the Bolsa Escola can be used as a safety net.In other words, can Bolsa Escola provide support during a negative shock.Negative shocks such as layoff of family members can have impacts on othermembers of the household-namely children who are pulled out of school and putinto the labor market as a household coping strategy. There is evidence fromBrazil today that exactly this may have happened during previous crises (Duryea1999). The Bolsa Escola programs in place might prevent such negativeoutcomes. However, this would be accurate only to the extent that the programalready covers all the households that suffered from the shock. Since today'spoor would be receiving the cash transfer before the shock hits, The cash transferwould smooth the impact of the shocks. It is likely that some of today's non-poorwill become tomorrow's poor when such a shock hits. These transient poor arehard to track (because they have permanent characteristics associated with thenon-poor and would consequently not qualify according to the targetingmechanisms currently in use). Therefore, complementary programs to address theneeds of the transitory poor would be most appropriate alternative.

26

10.8 The final issue is emphasized in the report is that the Bolsa Escola programs needto be formally evaluated more in terms of impacts. The evidence from theevaluations up until now is not robust enough to systematically evaluate theprogram in light of its multiple objectives. Continued assessments of programsuccess will enhance program design, targeting effectiveness, implementation,and monitoring and evaluation.

10.9 Expansion of the Programas Alvorada and PETI. Recently, in September 2000,the Brazilian Government has moved to scale-up and integrate separate cash-grantinitiatives financed by the federal government (FGRM-Fundo de Garantia daRenda Minima and PETI-Programa de Erradica,ao do Trabalho Infantil) underthe Alvorada program. Implementation continues the primary responsibility ofstates and municipalities. This national program will seek, over the next fewyears, the gradual implementation of a Bolsa Escola program in poormunicipalities with the worse indices of social development in country. Thispolicy initiative represents as a major step forward in program design and fiscalcommitment, it integrates within one coherent program both preventive initiatives(Bolsa Escola/FGRM with two million beneficiaries in 2000) and the remedialchild-labor eradication program (PETI, with four hundred thousand beneficiariesin 2000). Program Alvorada will permit MEC to address design andimplementation issues hindering the effectiveness of the FGRM program - verylow cash transfer level, complex benefit design and target exclusion of many poormunicipalities in the Northeast and North. By building on the complementarity ofexisting conditional cash transfers to the poor, and improving coordination witheducational initiatives aiming at universalizing basic education, it has thepotential do significantly increase targeting and effectiveness.

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APPENDIX I

DATA TABLES

TABLE 1.1

School Scholarship ProgramCoverage in the different areas

Belem 44,762 4,423 (June 1998)Belo Horizonte 51,730 3,300 (planned Dec./98)Brasilia 59,926 25,312 (Jan. 1999)

(*) Estimates obtained from PNAD-1996 (Special Tabulations by Sonia Rocha)(**) Information from the local programs

TABLE 2.1

Selected IndicatorsMetropolitan Nuclei and the Federal District 1996

t:0 dififi-ul At00:: i TAi00; Tot 00 ti Per cai# Nme (%) Garb \f gei W0tr SewergeNorth / Northeast

Belem (N) 965 308 44,762 19.66 87.84 81.16 8.31

Fortaleza (NE) 814 254 114,726 21.77 91.40 73.80 12.78

Recife (NE) 809 285 76,308 19.84 90.03 85.96 29.05

Salvador (NE) 898 318 148,323 23.11 89.53 89.44 42.64

Center South

Belo Horizonte (SE) 1307 452 51,730 8.95 93.50 96.62 87.86

Rio de Janeiro (SE) 1410 558 113,874 6.28 97.50 97.13 69.95

Sao Paulo (SE) 1547 538 168,298 6.11 99.16 98.93 86.42

Curitiba (S) 1589 567 13,791 3.26 98.62 97.86 47.93

Porto Alegre (S) 1563 633 30,099 6.88 98.64 95.58 33.89

Federal District (C) 1435 480 59,926 12.01 94.99 86.96 72.67

Source: IBGE / PNAD 1996(*) Data refer to 1995Concepts refer to the number of persons subjected to the following conditions:* Adequate water - public pipeline system and internal plumbing;* Adequate sewerage - public sewerage system;* Adequate garbage collection - directly or undirectly collected.

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TABLE 2.2

Enrollment rates for working and non-workingchildren in urban areas

Boy Girl TotallWorking?

No 0.94 0.95 0.9'iYes 0.84 0.83 0.83Total 0.93 0.94 0.94

Source: Rocha, March, 1999.

TABLE 2.3

Lag in grade for working and non-workingchildren in urban areas

Boy Girl TotalWorking?

No 43.91 37.82 40.77Yes 50.34 41.19 47.32Total 44.65 38.01 41.33

In this table we compute the mean of gfalag (gfalag=100-(attainme/age-6)*100).Source: Rocha, March, 1999.

TABLE 2.4

Incidence of Child Labor in urban areas- percentages

A_e ROY Girl Total10 0.05 0.01 0.031 1 0.07 0.03 0.0512 0.10 0.05 0.0713 0.13 0.07 0.1(14 0.22 0.11 0.16

Total 0.12 0.06 0.09Source: Rocha, March, 1999.

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TABLE 2.5

Child Labor in the Federal District - 1996

Alt 10o 14rs old04 chidldren 208,502Who work - number 7,463

- percentage (%) 3.58

10 to 14 yes old hildn in flimiies ws peTrprincomeslow Ai M"W 36,627

Who work - number 1,810

- percentage (%/O) 4.94

Who work at least 15 hours a week - number 1,584

- percentage (%) 4.32

Source: IBGE/PNAD 1996 (Special Tabulations).

TABLE 2.6

Child Labor, School Attendance and the Overlap by Region

W O } QiS & Wr Ntr ________

North 1.7 % 82.8 % 9.9% 5.5 % 100%NE 3.6 % 72.6 % 17.2 % 6.6 % 100 %MG/ES 2.5% 82.5% 11.0% 4.0% 100%Rio 1.0% 91.9% 2.9% 4.1 % 100%Sao Paulo 0.8 % 91.6 % 4.9 % 2.8 % 100 %Sul 1.9% 81.0% 13.2% 3.9% 100%Centro - Oest 2.4 % 81.3 % 10.8 % 5.5 % 100 %DF 0.6 % 94.1% 3.5 % -1.9 % 100 %Urban 2.1 % 85.1% 8.3% 4.2% 100%Brasil 2.3 % 81.5% 11.4% 4.8% 100%Source: PNAD, 1996. Special Tabulations by Sonia Rocha

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TABLE 2.7

Children out of school, according to the level of family income

7 to 14 years ohi out of school

Nucei Below .5 MW per capita income Below .25 MW per capita inome

Number % Number %

Belem 3,924 9.71 1,742 11.99

Fortaleza 10,683 9.54 5,127 14.81

Recife 4,992 6.88 1,664 5.60

Salvador 10,359 9.31 3,523 8.22

Belo Horizonte 4,822 8.49 1,521 8.82

Rio de Janeiro 4,467 5.06 1,676 4.77

Sao Paulo 8,057 7.63 2,687 6.13

Curitiba 1,858 14.30 265 8.33

Porto Alegre 1,662 6.51 415 6.67

Distrito Federal 4,746 7.55 1,521 7.82

Total 55,570 8.07 20,141 8.16

Source: IBGE/PNAD 1996, Special Tabulations by Sonia Rocha.

TABLE 2.8

Child Labor in the Ten Metropolitan Areas with Bolsa Escola

Nuclei Children who work (10 to 14)

Number _

Belem 873 3.37

Fortaleza 5,554 8.91

Recife 2,496 5.88

Salvador 1,245 1.73

Belo Horizonte 2,791 8.88

Rio de Janeiro 558 0.99

Sao Paulo 895 1.35

Curitiba 265 2.94

Porto Alegre 624 4.17

Distrito Federal 1,810 4.94

Total 17,111 4.10

Source: IBGE/PNAD 1996, Special Tabulations by Sonia Rocha.

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TABLE 3.1

Basic Criteria for Benefit ConcessionFederal District, Belo Horizonte and Belem

Crti Fea fliDsuiet &1eMi::: : :.m,te j:

Per Capita Family Income

* formal criteria (income per capita) 0.5 minimum wage 65.64 UFIR's 0.5 minimum wage

* in Nov/98 R$ 65.00 63.09 65.00

Presence of Children (age bracket) 7 to 14 7 to 14 4 to 14

Minimum period of residence 5 years 5 years 3 years

Source: Lavinas (1998).Minimum wage at R$130 in November 1998

TABLE 3.2

Number of families according to the age of children(Families living in the area for at least five years)

N400i Wt_t hi u Wth 77

total without 7-14Belem 2,182 24,122 15,405Fortaleza 6,404 69,227 35,467Recife 7,278 36,384 21,204Salvador 12,846 64,210 38,730Belo Horizonte 3,297 31,447 13,949Rio de Janeiro 17,862 47,450 24,561Sao Paulo 25,066 34,913 25,064Curitiba 1,062 8,483 4,243Porto Alegre 4,357 18,270 10,589Brasilia 1,808 13,115 8,368

Total 82,162 347,621 197,580Source: IBGE/PNAD 1996, Special Tabulations by Sonia Rocha

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TABLE 3.3

The Effects of Selection Criteria on theNumber of Families Covered by the Program

AU Families be'w Fuilr belw 11I MW Fa*ii1s b*6w 1/2 MW &112 MW quaWy & chidren 7-44 quwly eb 7-14 & 5 yr residency

No. of Families (000) No. of Families (000) No. of Families (000)Belem 45 22 21Fortaleza 115 62 :57Recife 76 40 :38Salvador 125 62 .56Belo Horizonte 52 30 :26Rio de Janeiro 114 54 44Sao Paulo 139 59 35Curitiba 14 7 6Porte Alegre 30 13 13Brasilia 60 32 6

Total 770 382 302

Based on a transfer of I min wage per family. Source: IBGE/PNAD 1996

TABLE 3.4

Reduction in potential beneficiary familiesdue to the residency requirement

and estimates of program's expenditures as proportion of current receipts

~~~~~~~~~~~lamO . _ ,

at last three yrsofreince Ateastfiveyears ofresidence

Nuclei % Of Current % ofCtrrent

T () Receipts (*) ReceiptsBelem -5.8 12.01 -6.46 11.93

Fortaleza -4.5 15.96 -6.92 15.55

Recife -4.6 11.70 -6.18 11.,1 I

Salvador -7.7 19.30 -8.42 19.1.6

Belo Horizonte -10.2 3.68 -11.87 3.61

Rio de Janeiro -17.5 2.51 -18.55 2.48

Sao Paulo -40.9 0.85 40.91 0.85

Curitiba -14.8 1.48 -14.80 1.48

Porto Alegre -3.1 3.11 -4.69 3.06

Brasilia -81.1 0.23 -81.12 0.23

Total -19.7 2.73 -20.70 2.70Source: Special Tabulations by Sonia Rocha*Restricting first by criteria that children are 7 to 14 years olil and that percapita income is below .5MW.

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TABLE 4.1

Number of families with 7 to 14 year old childrenwhose per capita income is below .5 MW

and estimates of program-expenditures as proportion of current receiptsaccording to the value of the family benefit

Nudlei Nwn0ber % o Curret Recipts

Familie One Mm. Wg W

Belem 22,524 12.75 6.38 2.55

Fortaleza 61,743 16.71 8.35 3.34

Recife 40,342 12.27 6.13 2.45

Salvador 61,527 20.92 10.46 4.18

Belo Horizonte 29,921 4.10 2.05 0.82

Rio de Janeiro 54,145 3.04 1.52 0.61

Sao Paulo 59,081 1.44 0.72 0.29

Curitiba 7,160 1.74 0.87 0.35

Porto Alegre 13,285 3.21 1.61 0.64

Brasilia 32,335 1.23 0.62 0.25

Total 382,063 3.40 1.70 0.68

Source: IBGE/PNAD 1996, Special Tabulations by Sonia Rocha.

TABLE 4.2

Fiscal costs of giving V/2 minimum wage basedon the number of children in the family

Nucle t Num000|br of %ofrent U % 000 :;7s Red,ucton00030

Belem 37,485 10.61 11%Fortaleza | 103,823 14.05 10%Recife 67,998 10.34 11%Salvador 101,712 17.30 10%Belo Horizonte 50,459 3.46 4°

Rio de Janeiro 71,457 2.01 19%Sao Paulo 56,394 0.69 19%Curitiba 10,877 1.32 11%

Porto Alegre 24,500 2.96 3%Brasilia 9,045 0.17 26%

Total 533,750 2.38 12%

Source: IBGE/PNAD 1996, Special Tabulations by Sonia Rocha.

34

TABLE 5.1

Dropout Ratesamong Beneficiaries and Non-Beneficiaries (%)

Year E3Beficiaries Non-Benerfciaries Total1994 - - 6.21995 0.2 6.5 6.01996 0.4 5.6 5.2

Source: School Scholarship Program (1996) and School Census (1995) as cited bySant'Ana and Moraes (1997).

TABLE 5.2

Promotion Rates Estimates - 1995-1996

________________ _ 1995 1996Beneficiaries (a) 79.8 87.9

(b) 67.0 80.2

Non-Beneficiaries (a) 79.5 79.9_______________ _ t b) 70.9 72.2

Total (a) _ 79.6 80.4-(b) 70.8 73.5

(a) Estimates by SanfAna and Moraes (1997) including the LiteracyCycle where promotion is automatic.

(b) Estimates which consider the 3rd. to the 8th. grades only

TABLE 6.1

Learning Performance of Beneficiaries and Non-BeneficiariesSelected from the SAEB Sample

Fourth Graders - 1997Subjec Beneficiaries Non-Beneficiaries

Number % correct number °/O correct

Portuguese 143 38.7 374 37.4

Mathematics 159 37.8 377 37.5

Science 162 42.4 377 43.5

Source: Abramovay, Andrade and Waiselfisz (1998), p.134

35

TABLE 8.1

The Effects of the Selection Criteria onthe Fiscal Sustainability of the Program

All Famtii# beloW Fautiies bIOMw 1/2 MW od"6 14*/2~ MW qafy Ciru714qwf ChIl"e 744 ya rsdec

Costs Costs CostsBelem 25.3 % 12.8 % 11.9 %

Fortaleza 31.1% 16.7 % 15.6 %Recife 23.2 % 12.3 % 11.5 %

Salvador 42.6 % 20.9 % 19.2 %Belo Horizonte 7.1 % 4.1 % 3.6 %Rio de Janeiro 6.4 % 3.0 % 2.5 %Sao Paulo 3.4 % 1.4 % 0.9 %Curitiba 3.3 % 1.7 % 1.5 %Porte Alegre 7.3 % 3.2% 3.1%Brasilia 2.3 % 1.2 % 0.2 %

Total 6.8 % 3.4 % 2.7 %

Based on a transfer of I min wage per family.Source:IBGE/PNAD 1996.

TABLE 8.2

Program's Cost as % of Current Municipality Revenues by Level of Transfer to Families

Belem 11.9 % 6.0 % 3.0 %Fortaleza 15.6 % 7.8 % 3.9 %Recife 11.5 % 5.8 % 2.9 %Salvador 19.2 % 9.6 % 4.8 %Belo Horizonte 3.6 % 1.8 % 0.9 %Rio de Janeiro 2.5 % 1.3 % 0.7 %Sao Paulo 0.9 % 0.5 % 0.3 %Curitiba 1.5 % 0.8 % 0.4 %Porte Alegre 3.1 % 1.6 % 0.8 %Brasilia 0.23 % 0.1 % 0.0 %Total 2.7 % 1.4 % 0.7 %Source: Special Tabulations by Sonia Rocha.

36

APPENDIX II

PROGRAM CRITERIA, DESIGN AND IMPLEMENTATION

This section describes more explicitly the actual criteria, design and implementationdetails of the programs that have been put in place beginning in 1995 until today.'4

Tables 1-II through 6-II demonstrate when the programs began in each municipality, theselection criteria used, the number of families benefiting relative to the number offamnilies eligible by municipality, how much and what type of support (income and/or in-kind services) families receive, and requirements of children to remain in the program.

Program Initiation and Duration

The first Bolsa Escola programs began in Brasilia and Campinas in 1995. Howeversimilar programs began as early as 1986 in some municipalities of the state of Sao Paolo(see Tables 1 and 2). In Sao Paolo state, up until March of 1999, forty-five programs hadbeen implemented. Another eleven municipalities across Brazil, from Amapa to PortoAlegre, have received the prograrm since 1995. This makes a total of 58 programs in allof Brazil according to the latest program data by Lavinas and Bittar.

Selection Criteria

The selection criteria used by the programs are much more varied than the originallyproposed selection criteria (see Tables 3-II and 4-II). The basic categories uitilized are: a)the presence of children of a certain age; b) a maximum family incorme; and c) aresidency requirement. Within these categories there is a great deal of discretion. Someadditional criteria involved a socioeconomic evaluation, having a mother as head ofhousehold, and other various characteristics.

Children's Age

Only one out of the twelve programs in municipalities other than in the state of Sao Paolorequire that children are between the ages of 0 and 14, seven require that children arebetween ages 7 and 14 and the remaining four have requirements which vary to includeboth younger and/or older children. In Sao Paolo, the majority of municipalities requirethat children be between the ages of Oand 14 while a great number have otherrequirements; for example, children between the ages of 0 and 20 or 0 to 14, or even thatthe child possesses some sort of learning deficiency.

Family Income

The three possible criteria used for income are a) per capita family income up to R$35, b)up to R$60 or c) the other category which varies to include from 1/2 of minilmum wage to1/4 of minimum wage, one or even two times of minimum wage. Out of the 58municipalities, nine require that beneficiaries eam at least R$35, fifteen accept

14 Lavinas, L. and M. Bittar. 1999.

37

beneficiaries who earn up to R$60, and the remaining fall in the other category. Withinthis third category, income varies greatly.

Residency Requirement

The criteria used for residency includes 2 years, 5 years or the other category (whichindicates either 1 year, 3 years or after a certain date). Forty-three of the municipalitiesrequire only two years of residency for eligibility in the program, ten require a minimumresidency of 5 years and the remaining municipalities vary between I and 3 years.

Mother Head of Household

Out of the 58 municipalities, 19 give preference to families in which the mother is thehead of the household. The remaining do not use this as a criteria for selection.

Other Criteria

Some of the municipalities also use other criteria which may include, for example, therequirement that children are deemed to be "at risk" or that they live in a certain areachosen by the program, or criteria based on a socioeconomic evaluation of the family.

Number of Beneficiaries

Based on the selection criteria discussed above, a number less that or equal to the numberof potential beneficiaries are benefiting from the program. A large number of theprograms are serving close to the total potential beneficiaries (see Tables 1-II and 2-II).In some cases such as Belem and Belo Horizonte, the number of beneficiaries is muchless than the potential beneficiary population (52% and 19% respectively). In Sao Paolostate as well, there are many municipalities which are not reaching all potentialbeneficiaries. The reasons for the programs not reaching all potential beneficiaries arenot clear from this data; however, it may be posited that the inability to reach the entireparameter population has to do with programn affordability in many cases.

Program Benefits

There are differences between municipalities in the type, amount and periodicity of thedistribution of the program benefits. Out of the 58 municipalities, there are four programswhich provide only some type of in-kind or service transfer, three programs whichprovide this and a cash grant, and 51 programs that provide only a cash grant. Someexamples of transfers other than cash include gas for use in cooking, constructionmaterials, food baskets and transportation vouchers. The amount of the cash grant as wellas the periodicity (monthly, annually or quarterly) varies between municipalities as well.

38

Requirements of Children

A family's ability to continue to receive benefits from the program includes five maincriteria and also varies by municipality (see Tables 5-11 and 6-11). School attendance,school performance, participation in other programs and another category which includesseveral different requirements, are those considered. The majority of the programs useschool attendance as a criteria to remain in the program. Only three out of the twelvenon-Sao Paolo municipalities use school performance as a criteria for children to remainin the program. In Sao Paulo, however, this criteria was much more commonly used (22out of 46 municipalities). The same is true in all of the municipalities for the requirementof participation in other types of programs. Some of the other requirements include suchthings as vaccination of children, children not working, and "appropriate" use of thefunds. This additional criteria may add substantially to the benefits received by childreninvolved in the program.

Table 1.11

General Program Data

_ _v_ _ of BenefitNo. of Adtul

MonWtyear No. of Families Benefieqy Income Food OtherMumicipality Ji~ogram Began Seleted F, milies ______ Bashet ________k

1. Amapa January/96 1200 1200 X2. Bel6m January/97 9320 4820 X3. Belo Horizonte August/97 27419 4500 X4. Boa Vista June/99 423 423 X5. Brasilia May/95 25680 23000 X6. Goias January/96 110000 110000 X Kitchen gas7. Mundo Novo May/98 300 300 X8. Paracatu May/98 3040 880 X9. Porto Alegre April/96 1621 1604 X10. Recife September/97 1000 800 X11. Sao Luis March/98 29615 29615 X X12. Tocantins August/96 60 20 X

Source: Lavinas, Le Bittar, M., IPEA, 1999

39

Table 2-11

General Program Data for the State of Sao Paulo

:Nl n n a edpaliy ; 0 Name ofthe Prosm inp Ff Aet; 0 f ad ;

I Aparecida/SP Programa Complementando a Renda Mar/99 60 20 X2. Areias/SP Programa Complementando a Renda Mar/99 38 20 Family Support3. Cagapava/SP Programa Complementando a Renda Jan/86 208 25 X4. Campinas/SP Programa de Garantia de Renda Familiar Minima Mar/95 9180 4530 X5. Campos do Jordao/SP Programna Complementando a Renda 431 89 X6. Caraguatatuba/SP Programa Complementando a Renda Jul/93 120 15 X7 Catanduva/SP Programa Bolsa Escola Jun/97 721 721 X8 Cruzeiro/SP Programa Complementando a Renda 0 50 X9 Ferraz de Vasconcelos/SP Programa de Renda Familiar Minima Jul97 310 109 X10 Franca/SP Programa Bolsa Educagao Jun/96 330 180 X11 Guaratingueta/SP Programa de Renda Familiar Minima May/95 68 40 X12 Guariba/SP Programa Complementando a Renda Oct/86 400 35 X13 llhabela/SP Programa Complementando a Renda Mar/99 42 45 X14. Jaboticaba/SP Programa de Renda Familiar Minima Apr/98 104 55 X15. Jambeiro/SP Renda Minima Jan/00 114 0 X16. Jambeiro2/SP Programa Complementando a Renda May/97 135 44 X17. Jambeiro3/SP Fortalecendo a Familia Mar/99 95 95 XI8. Jundiai/SP ProduSao Associada com Garantia de Renda May/96 534 243 X19. Lagoinha/SP Programa Complementando a Renda Mar/99 21 21 X20. Lavrinhas/SP Programa Complementando a Renda Mar/99 14 14 X21. Lavrinhas2/SP Fortalecendo a Familia Mar/99 225 225 X X22 LimeiralSP Programa de Garantia de Renda Familiar Minima Mar/98 578 528 X23. Monteiro Lobato/SP Programa Complementando a Renda Sep/87 200 42 X24 Natividade da Serra/SP Programa Complementando a Renda Mar/99 43 43 X25. Osasco/SP Programa de Combate a Miseria e Garantia de Sep/96 649 370 X26. Ourinhos/SP Programa de Garantia de Renda Familiar Minima Apr/98 692 133 X27. Paraibuna/SP Programa Complementando a Renda Jun/87 455 29 X27. Paraibuna2/SP Fortalecendo a Familia Jan/98 758 560 X Food Stamps28. Pindamonhangaba/SP Programa Complementando a Renda Jan/97 118 43 X29. Presidente Prudente/SP Programa de Garantia de Renda Minima Sep/97 3100 387 X30. QueluzlSP Programa Complementando a Renda Mar/85 400 18 X31. Reden9io da Serra/SP ProgwramaComplementando aRenda Mar/99 31 31 X32 Ribeirao/SP Programa de Garantia de Renda Familiar Minima Dec/95 2089 1300 X33. Santa Branca/SP Programa Complementando a Renda Mar/99 70 25 X34. Santo Andre/SP Programa Familia Cidadg Aug/98 466 422 X35. San Antonio de/SP Programa Complementando a Renda Dec/86 210 24 X36 Santos/SP Programa Nossa Familia Aug/98 301 117 X X Transportation37 S3o Bento do Sapucai/SP Programa Complementando a Renda Jan/92 300 150 X38. SAo Jose dos Campos/SP Programa de Garantia de Renda Minima e de Nov/97 4537 450 X39. S3O Sebastigo/SP Programa Complementando a Renda Mar/99 40 22 X40 53o Sebastiao2/SP Fortalecendo a Familia Mar/99 60 43 X41. Silveiras/SP Programa Complementando a Renda 0 24 X42. Taubate/SP Programa Complementando a Renda Jan/96 108 44 X Construction Materials43. Tremembe/SP Programa Complementando a Renda Jan/97 62 32 X44. UbatubW/SP Programa Complementando a Renda Mar/99 24 21 X45. Ubatuba2/SP Fortalecendo a Familia Mar/99 41 36 X

Source: Lavinas, Le Bittar, M., IPEA 1999.

40

Table 3-ILProgram Selection Criteria

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~~~~~~Crkteria_______ ______ __ __ Childs Age Pe Capita Family Icome

Municipality Cbildrn or From 0 to From I to Other Up to Up toRS6Q,00 OtherDependents 14years 14 years R$354)O _

1. Amapa X X X X

2. Belem X 4 - 14 years X up to 12 s.m.3. Belo Horizonte X X X up to R$65,004. Boa Vista X X X up to /2 s.m.5. Brasilia X X X up to ½/2 s.m.6. Goias X 0 - 6 years X up to I s.m.7. Mundo Novo X X X X8. Paracatu X X X X9. Porto Alegre X 0 - 18 years X up to 14 s.m.10. Recife X X X X11. Sao Luis X 7 - 16 years X X12. Tocantins X X X up to 2 sm.

Time off*sideace

Time Of Socio- Families wIMunicpality Residence 2 years 5 years Other Other Criteria Ekonomic Mother Head

._______________ ._______ ._.._.._...__ Status of Household1. Amapa X X X X2. Belem X 3 years Living in are X X

selected byprogram

3. Belo Horizonte X X X X4. Boa Vista X X 14 years X X5. Brasilia X X X X6. Goias X X X7. Mundo Novo X 2 years in munic. & X

5 years in the state8. Paracatu X X X X9. Porto Alegre X In risk situation X X10. Recife X x X11. Sao Luis X 3 years Children x X

attending school12. Tocantins I_I

Source: L. Lavinas and M. Bittar. IPEA. 1999

41

Table 4-11

Program Selection Criteria for the State of Sao Paulo

Mnnidpslity Childr or fromO0 to Pr~u Ito te tC4t ptRVt*SA t

1. Aparecida/S? X X X x2 Areias/SP X X X X3. Cagapava/SP X Up to lMW4. Campinas/SP X X Disabled X X5 Campos do JoTdao/SP X 0 to 16 years X Up to R$266 Caraguatatuba/SP x 0 to 20 years X X7. Catanduva/SP X X X X8 Cruzeiro/SP X X X Up to RS209. Ferraz de Vasconcelos/SP X X X X10 Franca/SP X 7 to 16 years X XI1. Guaratingueta/SP X X X Upto¼MW12. Guariba/SP X 0 to 18 years X Up to RS4013. Ilhabela/SP X X X X14. Jaboticaba/SP X X X Up to RX5015. Jambeiro/SP X X16. Jambeiro2/SP X X x x17. Jarnbeiro31SP X X18. Jundiai/SP X X19. Lagoinha/SP X X X Up to R$5020. Lavrinhas/Sp X X X Up to RS5021 Lavrinhas2/SP X X22. LimeiratSP X 6 to 14 years Family income < 2 MW23 Monteiro Lobato/SP X X24. Natividade da Serra/SP X up to 15 years X Up to R$5025 OsascolSP X X disability X X26. OurinhostSP X X X X27. ParaibuntaSP X X Family income < R$5027. Paraibunsa2/SP x X Family income < RS5028. Pindamonhangaba/SP X X disability X Up to R$5029. Presidente Prudente/SP X X X Up to 37.5% MW30. QueluzlSP X X31. Redencao da SerTa /SP X o to 15 years X Up to R$5032. Ribeiruo Prieto/SP X X Family income <33. Santa Branca/SP X X Variable34. Santo Andre/SP X X X Up to ¼/ MW35. San Antonio de PinhaltSP X X Family income <36. Santos/SP X 0 to 16 years X Up to R$5037. Sao Bento do Sapucai/SP X X Up to 18 years X

- disability38 Sao Jose dos Campos/SP X X X Up to / MW39 Sao SebastiaolSP X X X X40. Sao Sebastiao2/SP X X X X41. Silveiras/SP X X X X42. Taubate/SP X X X Up to R$S5043. TremernbdlSP X X X Up to RS5044. Ubatuba/SP X variable X X45. Ubatuba2/SP X X

Source: Lavinas, Le Bittar, M., IPEA

42

_ _ _ _ _ _ _ __ _ ._ _ _ _ _ _ _ Othet tistf,ntnS_,_rime of __. . Fa2=wIw/ Mot*

municip*11y Resience Z yCan 5yars Other OtberCri* EA.a.mk Motlid Of Hieo8d._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Ie is h atio a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1. Aparecida/SP X X X X

2 Areias/SP X I year X3 Cacapava/SP X X X X4. Campinas/SP x 2 years after law X5 Campos do Jordao/SP X X X6. Caraguatatuba/SP x I year X7. Catanduva/SP X 3 years Application and X

home visit8. Cruzeiro/SP X X X9. Ferraz de Vasconcelos/SP X X X X10 Franca/SP X X X X11. Guaratingueta/SP X X X X12. Guariba/SP X I year X13. Ilhabela/SP X X X14. Jaboticaba/SP X 3 years X15. Jambeiro/SP X I year X16 Jambeiro2/SP X X X17. Jambeiro3/SP X X X18. Jundiai/SP X X Presence of child & X

school attendance19. Lagoinha/SP X X X20. Lavrinhas/SP X21. Lavrinhas2/SP X Unemployed X22. Limeira/SP X Since 1993 X23. Monteiro Lobato/SP X I year Application and X

home visit24. Natividade da Serra/SP X X x25. Osasco/SP X Before July 1994 X26. Ourinhos/SP X X X X27. Paraibuna/SP X X X27. Paraibuna2/SP X X x28. Pindamonhangaba/SP X X X29. Presidente Prudente/SP X 3 years X30. QOueluztSP X31 Redencao da Serra /SP X X X32. Ribeirao Prieto/SP X X Housing X X33. Santa Branca/SP Live in the X

Municipality34. Santo Andre/SP X 3 years X X X35. San Antonio de/SP X36. SantosISP X I year Situation of nsk X X37. Sao Bento do Sapucai/SP X X Number of children X X38. Sao Jose dos Campos/SP X X x x39. Sao Sebastiao/SP X X X40. Sao Sebastiao2/SP X X X41. Silveiras/SP Live in the X

Municipality42. Taubate/SP X X X43. Tremembe/SP X X x44 Ubatuba/SP45. Ubatuba2/SP _

Source: Lavinas Le Bittar, M., IPEA.

43

Table 5-11

Program Requirements of the Children

IffrlSiipa~lty . mpose School Sch~*ln Others

1. Amapa X X X2. Belem X X Children not working3. Belo Horizonte X X4. Boa Vista X X X5. Brasilia X X Vaccinations6. Goias X X7. Mundo X X X Mirim Patrol8. Paracatu X X X9. Porto X X X Good use of money10. Recife X X11. Sao Luis X X12. Tocantins X X X

44

Table 6-11

Program Requirements of the Children in the State of Sao Paulo

._r..dp,ti" i nidtPwky Impoap ScboeR Attewn School Perfornue oter Progyms Others

I Aparecida/SP X X X X

2 Areias/SP X X X X

3. Cagapava/SP X

4 Campinas/SP X X X Using resources to improve thequality of life

5 Campos do JordAo/SP X X

6. Caraguatatuba/SP X X

7 CatanduvatSP X X X

8. Cruzeiro/SP X X X X

9. Ferraz de Vasconcelos/SP X X X Vaccination10. Franca/SP X X

11. Guaratingueta/SP X X X

12. Guariba/SP X X

13. Ilhabela/SP X X14 Jaboticaba/SP X X X X

15. Jambeiro/SP X X X

16. Jambeiro2/SP X X

17. Jambeiro3/SP X

18. Jundiai/SP X X X

19. Lagoinha/SP X X X X

20. Lavrinhas/SP X X

21. Lavrinhas2/SP X X X X

22. Limeira/SP X X

23. Monteiro Lobato/SP X X

24 Natividade da Serra/SP X X X X

25. Osasco/SP X X X

26. Ourinhos/SP X X X

27. Paraibuna/SP X X X

27. Paraibuna2/SP X X X

28. Pindamonhangaba/SP X

29. Presidente Prudente/SP X X X

30 Queluz/SP X X

31. Reden,co da Serra /SP X X X X

32. Ribeirao Prieto/SP X X X

33. Santa Branca/SP X X

34. Santo Andre/SP X X X X

35 San Antonio de Pinhal /SP X X X X

36. Santos/SP X X X X

37. SAo Bento do Sapucai/SP

38. SAo Jos6 dos Campos/SP X X

39. Sao Sebastiao/SP X X X X

40. Slo Sebastiao2/SP X X X

41. Silveiras/SP X X X

42. Taubate/SP X X X

43. TrememWSP X

44 Ubatuba/SP X

45. Ubatuba2/SP X X X

Source: Lavinas, Le Mariana, B., IPEA 1999

45

APPENDIX III

PROGRAM TARGETING IN THE FEDERAL DISTRICT

This appendix discusses in more detail the evaluation of the pioneer program of BolsaEscola in Paranoa, D.F done by Saboia and Rocha in 1998. This evaluation demonstratesthe effective capacity of the program to distinguish the most destitute families and toincorporate them into the program. In the study, first family characteristics of potentialbeneficiary and non-beneficiary families are observed and second, using the PNAD- 1995dataset, they calculate the number of families who satisfied the program criteria andcompare this with the number of families who actually benefited after a year and a half ofimplementation.

FAMILY CHARACTERISTICS OF POTENTIAL BENEFICIARIES15

Comparing potential beneficiaries to non-beneficiaries they first examine familycharacteristics and find that 96.8% of potential beneficiaries are female, demonstratingthat the program would be successful in making the monetary transfer to the mother orthe adult responsible for the child in the household. They also find that 90% of potentialbeneficiaries were born outside of the Federal District -an indication of high migration tothe area. However, since one of the selection criteria established by the program is aminimum residence of five years in the area, they also compare potential beneficiariesand non-beneficiaries in terms of number of years spent living there. They find that onlythree out of the 2,629 families had lived in the area less than five years. In fact, almost23 percent of the beneficiaries had lived in the area for more than twenty-five years. Thisdemonstrates that the program is not capturing recent migrants and that it is not providingan apparent incentive for migration.

Table 1-IH

Time of Residence in Paranoa, D.F.

No. of Cases % No. of Cases %Less than 5 years 3 0.1 --- 0.05/9 years 511 19.4 88 17.310/14 years 497 18.9 83 16.315/19 years 575 21.9 125 24.620/24 years 443 16.9 96 18.925 or more 599 22.8 116 22.8

Total 2,629 100.0 508 100.0Saboia and Rocha, 1998.

15 Potential beneficiaries refers to program applicants.

46

In addition, Saboia and Rocha examine age distribution among potential beneficiaries andnon-beneficiaries as well as their partners, and find that the average age is 37 years whichwould be consistent with having children between the ages of 7 and 14. Familycomposition is another important factor in considering whether or not the programattracts the appropriate beneficiaries. The average number of family members wasapproximately five and 9.3 percent had seven family members. A larger number offamily members indicates a smaller family income especially if many of those membersare children. Table 2-Ill shows that of applying families, 54.6 percent have children age14 or below and 13.7 percent have children older than 15, while the potential beneficiaryparent makes up 19.8 of the households and their partners 11.9 percent. Sumrning up, thepotential beneficiary families correspond with the model of the organization of aBrazilian family -nuclear family- with few members from the extensive family.

Table 2-III

Family Composition - Paranoa

Potential Bfeneicinries Non-BeneficiariesNo. of Cases % No. of Cases %

Family representative'6 2.629 19,8 508 22,4Partner 1.589 11,9 339 14,9Dependents (0/14) 7.267 54,6 1.136 50,0

Child 7.054 53,0 1.104 48,6Niece of nephew 181 1,4 25 1,1Other 32 0,2 7 0,3

Dependents (15 or +) 1.823 13,7 289 12,7Child 1.750 13,1 278 12,2Niece of nephew 7 0,1 0,0Mother/Father 34 0,3 8 0,4Mother/Father In-Law 6 0,0 1 0,0Other 26 0,2 2 0,1

Total Number of Indiv. 13.308 100,0 2.272 100,0Saboia and Rocha, 1998.

Saboia and Rocha also examine the potential beneficiaries' (parents') educationalattainment levels which is an important factor to consider in that often the poverty cycleis repeated due to lack of education. The evidence demonstrates that 26.4 percent areilliterate, 61.9 percent are barely literate, 10.4 percent have completed the first grade andonly 1.3 percent have completed second grade. The evidence also demonstrates forpotential beneficiaries the slow progression through school and increase by age in beingbehind in school -at age 7 the average lag in school attainment is 0.3 years while at age14 it has reached 3.6 years. Again, this demonstrates that the program would reachfamilies who have a pattern of low school attainment, a result of slow progressionthrough school.

16 Family representative is usually the mother as the benefit goes to the mother by design of the prograrn.

47

The labor status of potential beneficiaries, demonstrated in Table 3-Ill, is also examinedshowing that only 53.2 percent are working; of those only 45.4 for salary and 53.9percent are self-employed. Of the partners of the potential beneficiary parents that areworking, 86.7 percent are working, which emphasizes that men are the breadwinners inmost households.

Table 3-Im

Labor Status of Potential Beneficiaries and Non-Beneficiaries - Paranoa

B*Fami703nly R Bei p retah Pai . e

No. of % No. of % No. of % No. of %Cases Cases Cases Cases

Working 1,398 53.2 293 57.7 521 86.7 29 96.7Not Working 1,229 46.8 215 42.3 80 13.3 1 3.3Total 2,627 100.0 508 100.0 601 100.0 30 100.0

Income is another important family characteristic to examine when determining whetheror not the program is attracting the intended beneficiaries. Tables 4-III and 5-IIIdemonstrate that, as expected, average family income of beneficiaries was very low.Average family income was equal to R$ 175.40, while average per capita income wasequal to R$35.00. Considering minimum wage as a benchmark for per capita income, 29percent earned less or equal to 1/4 minimum wage, 85.2 percent earned less up to 1/2 ofminimum wage and 99.1 percent up to 0.7 of minimum wage. 17

Table 4-II

Average Family Income of Beneficiaries - Paranoi

Tow ita come _______._________:_______o _ . - d

AmountS (1$ No; of ' O720S ;ig0;002a1 offtI.eomff! Am- (,Ri $

WorkUp to 100 630 24,0 Family Representative 170.332 36,9101/200 1.311 49,9 Partners 198.323 42,9201/300 514 19,6 Other members 25.911 5,6301/400 134 5,1 Pension 19.566 4,2401/500 27 1,0 Retirement 7.851 1,7501/600 8 0,3 Rent 15.498 3,4601/700 2 0,1 Food voucher 3.293 0,7701/800 1 0,0 Other 21.194 4,6

Total 2.627 100,0 Total 461.968 100,0

'7 It should be noted that while the selection criteria requires that beneficiaries have an income of less thanor equal to 1/2 of minimum wage, in practice the program has actually included those families with incomeup to 0.7 of minimum wage. This allowed for a larger number of families to be reached and in Paranoaraised the number by 15 percent.

48

Table s-M

Income Per Capita

Amoutnt (RS) No-o oCases _____

Up to 25,00 740 29,025,01/50,00 1.436 56,250,01/70,00 341 13,470,01/100,00 33 1,3100,01/125,00 3 (1,I

Total 2.553 100,0Seboia and Rocha, 1998.

Evaluation of Program Targeting

Saboia and Rochas' examination of the PNAD data demonstrates, based on the criteria,that the number of beneficiaries reached by the end of 1996 was 27,000 equaling animpressive 77 percent of the total number of potential beneficiaries in 1995 which was 35thousand families. The question is, however, if these families in effect demonstrated thecharacteristics of the target population. The evidence demonstrates that the program didreach those intended in that the characteristics of the beneficiary families matched theselection criteria. The indicators also demonstrate that the beneficiaries were actuallysubject to socioeconomic conditions more adverse than the population limited by theselection criteria. Assessing the population based on the criteria of age (7-14), income(less that 0.7 of minimum wage)' , and residency (at least five years), Table 6-IIIdemonstrates the number of families reached for each criteria.

Table 6-111

Selection Criteria ofProgram Applicants in the Federal District - 1995

thousand (¶) thousaud (%)_iddals families

Relevant Population 1.7161 100 477.8 100Income per capita less than 0.7 MW 342.5 17.1 81.9 17.1Residency of at least 5 years 221.0 12.9 52.8 11.1With Children ages 7-14 148.8 8.6 35.6 J 7.4Source: IBGE/PNAD, 1995 (Special Tabulations). Saboia and Rocha, 1998.

Table 7-III compares the characteristics between the selected population (beneficiaries),and the parameter population which refers to the population limited by the selectioncriteria. For average family income, there is only a three percent difference between thetwo groups. However, for average per capita income the difference is substantially larger

18 Although the original income requirement established by the program was 0.5 of minimum wage, theprogram in the Federal District broadened the criteria to include those earning less than 0.7 of minimumwage.

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-18 percent when considering the difference in family size. In other words, the averageincome of the selected population is lower than for the parameter population. The lastrow in the table gives the income ratio, which takes as the poverty line 0.66 of minimumwage. This demonstrates that the intensity of poverty is 0.45 for the selected populationwhile for the parameter population it is much less (-0.35). These results are evidence thatthe program is reaching an even poorer population than it had targeted through thecriteria, which is positive given the objectives of the program.

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Table 7-11I

Income, Family Size and Intensity of PovertyComparison between the Selected Population (Beneficiaries)

and the Parameter Population

Selected Population Parameiter Population

Average Family Income (R$) 175.4 1:30.4

Average Per Capita Income (R$) 36.3 43.2

Average Family Income 4.8 4.2

Income Ratio 0.45 0.35

Source: IBGE/PNAD, 1995Bolsa-Escola (Paranoa Registry)

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Annex 1

Table 1Scoring Criteria for the School Scholarship Program Federal District and Belem

Selected Topics

Priority for concessionDependents under special custody 160 50 160Dependents under socio-educacional custody - 50 160Undernourished children from 0 to 6 years 160 50Dependents of hadicapped elders 160 50 1604 to 14 years old handicapped children - - 160Handicapped 160 50Number of children (0 to 14 years)

I 0 0 02 20 70 203 50 140 504 80 210 805 110 280 1106 140 350 1407 180 420 180

8 or more 210 490 210Marital StatusApplicants with spouse 0 0Applicants without spouse 100 110Single - - 150Married - - 0Divorced - - 150Widow - - 150Applicant's SchoolingIlliterate 50 50 50Literate 25 25 25Incomplete Primary School 15 0 15Complete Primary School 15 0 15Incomplete High School 5 -25 5Complete High School 5 -25 5Spouse's SchoolingIlliterate 50 - 50Literate 25 - 25Incomplete Primary School 15 - 15Complete Primary School 15 - 15Incomplete High School 5 - 5Complete High School 5 - 5Applicants Labor Market Engagement

"8iscateiro" 80 50 80

Farmer 75 37.5 75

Employee 65 25 65

Retired 60 12.5 60

Inactive 20 0 20

Spouse's Labor Market Engagement

"Biscateiro" 80 - 80

Farmer 75 - 75

Employee 65 - 65

Retired 60 - 60

Inactive 20 - 20

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Housing Status

Rented 120 100 120

"Cedido" 80 0 80

Owner occupied dwelling in irregular property 20 0 20

Owner occupied dwelling in regular property 0 0 0

Per Capita Family Income (R$)

0 - 13.00 - 100 -

0 - 16.00 - - 40

14.00 - 28.00 - 75 -

17.00- 32.00 - - 25

29.00 - 33.00 - 50 -

33.00 - 48.00 - - 10

34.00- 56.00 - 25 -

48.00 - 65.00 - - 5

57.00 - 70.00 - 0 -

66.00 or more - - 0

71.00 or more - -100 -

up to 25 50 -

from 26 to 50 35

51 or more 0

53

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Sant'Ana, Silvio Rocha, Moraes, Andrea. Avaliacao do Programa Bolsa Escola do GDF.Fundacao Grupo Esquel Brasil, 1997.

Schultz, T.Paul. June,1999. Preliminary Evidence of the Impact of Progresa on SchoolEnrollment from 1997 and 1998. International Food Policy Research Institute.

Waiselfisz, Julio J., Miriam Abramovay, and Carla Andrade. Bolsa Escola -MeloriaEducacional e Reducao da Pobreza. Projecto Conjunto: UNESCO, UNICEF,POLIS. Brasilia, March, 1998.

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Waiselfisz, Julio J. Resumen Ejecutivo del informe "Programa de Becas Escolares delDistrito Federal" de Brasil. De Igual a Igual: El Desaflo del Estado Ante LosNuevos Problemas Sociales 1999 Fondo de Cultura Econ6mica de Argentina,S.A., pp214-227.

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