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The Medium-Term Impact of Conditional Cash Transfers on Health and Education in Indonesia

Location: Indonesia
Sample: 360 sub-districts, 14,000 households
2007 to 2013
Target Group: 
Mothers and pregnant women
Outcome of Interest: 
Enrollment and attendance
Food security and nutrition
Intervention Type: 
Cash transfers

In many developing countries, poor households have limited capacity to access adequate health and education services due to financial constraints. Conditional cash transfer (CCT) programs have been implemented widely to improve access to these services and to promote comprehensive investments in children. Researchers examined the medium-term impacts of a large-scale CCT program on health, education, and employment outcomes in Indonesia. Six years following the introduction of cash transfers, the program resulted in improvements in health and education, including large reductions in stunting, improved immunization rates, increased usage of trained health professionals, and increased school enrollment.

Policy Issue 

In many developing countries, financial constraints limit poor households’ access to adequate health and education services. Globally, conditional cash transfer (CCT) programs have been widely adapted to improve access to these services. These programs offer money to poor households on the condition that they perform a set of predetermined behaviors and are often designed to promote comprehensive investments in children, starting from encouraging pre-natal and maternal care and early childhood health interventions and continuing through incentivizing school attendance.

Despite the adoption of CCTs by some countries and mounting evidence suggesting they can be effective in improving health and education outcomes, most existing research examines the short-term effects of these programs but fails to capture the cumulative effects that can only be observed after multiple years of program implementation. To fill this gap, researchers examined the long-term impacts of a large-scale CCT program on health, education, and human capital outcomes in Indonesia.

Context of the Evaluation 

Despite economic growth in recent decades, Indonesia continues to lag behind on a number health and education indicators.1 For example, as of 2015, 37.2 percent of children under age five were affected by stunting—a condition where children have impaired growth and development due to a range of factors, such as poor nutrition and exposure to prolonged infections.2 Furthermore, rates of education participation and assisted childbirth by trained medical professionals remain low, especially among the poorest families.3

In response to these health and education challenges, in 2008, the Government of Indonesia, together with the World Bank Indonesia, introduced Program Keluarga Harapan (PKH), the country’s CCT program. PKH provides moderately sized, regular, financial assistance to households that adhere to conditions that aim to improve investments in child health and education. Very poor households with children or pregnant and/or lactating mothers are eligible to participate.

Children in a classroom in Indonesia.

Photo: Shutterstock.com

Details of the Intervention 

Using data from nearly 14,000 households across 360 sub-districts in Indonesia, researchers evaluated the long-term impacts of the PKH program on health, education, and employment outcomes six years after the program’s launch.

The program initially distributed cash transfers in 438 sub-districts randomly selected from a total of 736 eligible sub-districts. Researchers collected data from 360 of theses sub-districts—180 of which received the program and 180 of which acted as the comparison group.

In sub-districts where the program was implemented, each household received cash transfers ranging between IDR 600,000-IDR 2,200,000 (US$60-US$220) at the time of evaluation—equivalent to roughly 15 to 20 percent of the household’s income—conditional on completing a range of health and education requirements (e.g. attending pre- and post-natal check-ups, undergoing assisted delivery, bringing children to weight checks at community clinics, fully immunizing children, and complying to school enrollment and attendance requirements).

Trained facilitators visited households to verify that they met these conditions. Failure to comply to the conditions resulted first in a warning letter, followed by a 10s percent cut in benefits, and finally, program expulsion, depending on the number of violations. However, the verification system was not implemented until 2010, and even afterwards, the conditions were not always enforced

The program later expanded such that, by 2013, it reached over 2.3 million households across 3,400 Indonesian sub-districts. However, nearly 60 percent of the sub-districts initially assigned to the comparison group still did not receive cash transfers six years following the introduction of the program, allowing researchers to evaluate its longer-term impacts. Furthermore, to analyze the longer-term trends of the CCT program, this evaluation compared the effects after six years to the results observed in a 2009 evaluation—two years following the program’s initial roll out.

Results and Policy Lessons 

Six years following the introduction of PKH cash transfers, the program continued to promote health and educational investments in children. Children in households that received PKH cash transfers experienced large reductions in stunting and improved immunization rates. Furthermore, the program increased usage of trained health professionals for childbirth and halved the share of children age 7 to 16 who were not enrolled in school.

Health behaviors: Households who received the PKH cash transfer increased their utilization of a number of health services. Households that received cash transfers were more likely to have childbirths assisted by trained professionals and to fully immunize their children six years following the introduction of the program. Mothers who received the program were also 13 to 17 percentage points (18 to 24 percent) more likely to undergo childbirth at a health clinic compared to the comparison group, who delivered in health facilities 73 percent of the time.

However, other behaviors, such as frequency of weight checks at health clinics and pre- and post-natal visits did not show further improvements after six years. The authors suggest this may be explained by increases in the number of comparison households utilizing these services—allowing them to essentially catch up to PKH recipient households.

Health outcomes: Children of families who received the PKH cash transfers experienced large reductions in stunting. For children in households that received the program, stunting declined by 9 to 11 percentage points (23-27 percent) relative to the comparison group, where 39 percent of the group reported cases of stunting. The program also reduced severe stunting by roughly 10 percentage points (45 percent) relative to the comparison group, where 18 percent of households reported children with severe stunting. The effect was slightly larger among boys than girls. Notably, these impacts on stunting were not observed two years following the program, but only six years after implementation. The authors suggest the effects on stunting were driven by prolonged attention to weight and nutrition during the early lifecycle of children whose parents received cash transfers.

Education enrollment and completion: Children from households who received PKH cash transfers increased their school enrollment and attendance. Six years into the program, researchers observed increases in school enrollment for all children aged 7 to 15. The program increased enrollment by 4 percentage points (4.3 percent)--representing aa 53 percent decrease in the fraction of students who were not enrolled in school.

Students aged 15 to 17 who received the program were more likely to attend any kind of school in the six year follow-up. Students in the 18 to 21 age group were also 7 percentage points (28.6 percent) more likely to complete high school relative to the comparison group, of whom only 26 percent completed high school.

Labor: Children from households who received cash transfers showed reduced participation in child labor, while young adults from these households did not participate more in paid jobs. Children aged 13 to 15 in households receiving cash transfers reduced their participation in child labor by 3-4.4 percentage points (34-48 percent) relative to the comparison group, where 92 percent of children reported engaging in child labour.

However, young adults aged 16 to 17 and 18 to 21 from households receiving cash transfers were not more likely to participate in paid jobs. Young men in this age group who received the program were more likely to participate in family businesses, while women showed no changes in participation in family businesses or housework.

Household Consumption & Assets: Households who received the program showed no increase in land ownership or other forms of assets, such as livestock. Furthermore, they did not increase consumption and expenditure in health or education.

Cahyadi, Nur, Rema Hanna, Benjamin A. Olken, Rizal Adi Prima, Elan Satriawan, and Ekki Syamsulhakim. “Cumulative Impacts of Conditional Cash Transfer Program: Experimental Evidence from Indonesia.” NBER Working Paper #24670, May 2018.