Can Conditional Cash Transfers Reduce Poverty and Crime? Evidence from Brazil

Abstract

Conditional Cash Transfers (CCT) programmes are deemed to be effective measures at reducing poverty and income inequality in many developing countries. Another possible important consequence is its effect on criminal behaviour. This paper analyses a panel data set on crime rates and the Brazilian Bolsa Familia, the largest CCT programme in the world, in order to investigate these relationships and estimate the effect of these policies on crime rates. The related existing economic literature analysing general welfare programmes generally ignores the crucial endogeneity involved in the relationship between crime rates and social welfare policies, through poverty. Temporal heterogeneity in the implementation of the programme across the states is used to identify the causal impact of CCT programmes on poverty and criminality. States that reached the level of cash transfers expenditures proposed by the guidelines of the programme more promptly had a more significant reduction in poverty rates. Similar, but less robust results are found for crime rates as robbery, theft and kidnapping, while no significant effects were found for homicide and murder, indicating that property crime would be more sensitive to CCT programmes.

Keywords: Criminal Behaviour, Poverty, Conditional Cash Transfers

JEL Classification: K40, I38, H53, C23