relative terms) in low income and egalitarian countries, while redistribution is more successful in middle income and inegalitarian countries (Bourguignon, 2004: 10). On the other hand, lower inequality also promotes higher economic growth. For example, under credit market imperfections, additional sources of income for poor households may promote human capital and productive investments without being exposed to higher rates of interests. Besides, reducing inequality may generate lower future expectations of redistribution, higher social cohesion, political stability and peace (Bourguignon, 2004). In this sense, redistribution has a positive effect on ultimate and intermediate sources of economic growth and development. 2.2. Behavioural Effects: Human Capital Social protection may improve peoples‟ well-being and opportunities by promoting human capital through behavioural effects related to education, health and nutrition.17 Social transfers affect household decisions through income (i.e. the response to changes in disposable income) and non-income effects (i.e. the response to the way SPI are implemented or conditioned). Behavioural effects related to various dimensions of human capital are both an objective and a foundation for socio-economic development, eventually fostering economic performance. Human capital affects labour productivity and as such the proximate sources of economic growth. The different dimensions of human capital are closely interrelated. For example, nutrition has a direct effect on cognitive capacity and then on education achievements (e.g. Wisniewski, 2010). The aim to generate positive non-income (behavioural) effects makes the case for conditional cash transfers (CCT).18 A CCT programme requires recipients to fulfil different conditions in order to receive the transfer. Furthermore conditionality may generate political will and public support from those not receiving a transfer (Schüring, 2010; Schüring and Gassmann, 2012). Usually, conditions include child school attendance and visits to health care facilities. However, there is evidence to argue that these kinds of effects are produced even without a formal condition through the income effect (e.g. Schady and Araujo (2006); Agüero, Carter and Woolard (2007)). In the case of CCT programs it is not evident to what extent the behvioural effect is due to the cash transfer (i.e. income effect) or due to non-income effects (e.g. the conditions attached), i.e. whether the same results would have been achieved without the condition. Eventually, the potential effects of CCT on health care utilization and schooling depend on the level of coverage, quality of service, elimination of potential access barriers, costs and administrative capacity. This study, being an ex-ante evaluation of social transfers, concentrates on behavioural effects instigated by higher disposable income (i.e. income effect). Non-income effects are beyond the scope of this study, but future research about these additional effects is recommended in 17
However other forms of human capital as soft skills (e.g. personality and social traits, communication abilities, critical thinking, team work, leadership, entrepreneurship) should also be promoted. 18 For a comprehensive review of CCTs see Schüring (2010) and, Fiszbein and Schady (2009). 32