This presentation is part of the programme of the International Seminar "Social Protection, Entrepreneurship and Labour Market Activation: Evidence for Better Policies", organized by the International Policy Centre for Inclusive Growth (IPC-IG/UNDP) together with Canada’s International Development Research Centre (IDRC) and the Colombian Think Tank Fedesarrollo held on September 10-11 at the Ipea Auditorium in Brasilia.

1. Incen%vizing
School
Comple%on:
Evidence
from
the
Renda
Melhor
Jovem
Program
Claudio
Ferraz
PUC-­‐Rio,
BREAD,
JPAL
Vitor
Pereira
PUC-­‐Rio
Brasília,
September
2014

2. Introduction
§ CCTs have been effective in increasing school
attendance for primary schooling across many
developing countries

3. Introduction
§ CCTs have been effective in increasing school
attendance for primary schooling across many
developing countries
§ But school drop-out and limited learning is still a huge
problem, specially in secondary schooling and for
poorer students.

4. Introduction
§ CCTs have been effective in increasing school
attendance for primary schooling across many
developing countries
§ But school drop-out and limited learning is still a huge
problem, specially in secondary schooling and for
poorer students.
§ High school drop-out has been shown to reduce future
wages, decrease labor market participation, and affect
crime and health outcomes (Lleras-Muney 2005,
Lochner and Moretti 2004, Oreopoulos 2007)

5. Introduction
§ CCTs have been effective in increasing school
attendance for primary schooling across many
developing countries
§ But school drop-out and little learning is still a huge
problem, specially in secondary schooling and for
poorer students.
§ High school drop-out has been shown to reduce future
wages, decrease labor market participation, and affect
crime and health outcomes (Lleras-Muney 2005,
Lochner and Moretti 2004, Oreopoulos 2007)
§ How can we incentivize poor students to complete high
school?

6. School Attainment by income status
.4 .6 .8 1
% individuals that completed each grade
School attainment by income quintile
5 6 7 8 9 10 11 12
Grade
Lowest income quintile
Highest income quintile
Note: Cohort aged 20-24, data from PNAD 2012 state of RJ

7. The intervention
§ Renda Melhor Jovem provides incentives for high
school students to stay in school and progress through
grades

8. The intervention
§ Renda Melhor Jovem provides incentives for high
school students to stay in school and progress through
grades
§ How?

9. The intervention
§ Renda Melhor Jovem provides incentives for high
school students to stay in school and progress through
grades
§ How?
§ Students are eligible to open a savings account and
receive an yearly transfer upon passing their grade in
high school (can withdraw 30%)
§ Passing 10th grade: R$700
§ Passing 11th grade: R$900
§ Passing 12th grade: R$1000
§ Passing 13th grade (technical schools): R$1200
§ Scoring above 500 in the national college admission
exam: R$500

10. The intervention (cont.)
§ Who is eligible?
§ High school students from families that receive the Renda
Melhor Program (Income per capita less than R$100)
§ Enrolled in a public school and younger than 17 years
old.
§ Students have to take at least 2 (out of 3) state
assessment exams per year.
§ Students are informed of their eligibility in schools and
have to go to a bank branch to open savings account

11. Program implementation
§ Program was
phased-in across
municipalities in
the state of Rio
§ 3 municipalities in
2011
§ 52 municipalities
(out of 92) in 2012

12. Phase-in of Renda Melhor Jovem
Total Received program
Year 2011 2012
Municipalities 92 3 52
Schools 1,060 95 808
Total Students in school 362,000 361,867 355,572
Students eligible for RMJ 5,725 61,743
Students with savings account 2,830 16,120

13. Phase-in of Renda Melhor Jovem
Total Received program
Year 2011 2012
Municipalities 92 3 52
Schools 1,060 95 808
Total Students in school 362,000 361,867 355,572
Students eligible for RMJ 5,725 61,743
Students with savings account 2,830 16,120
§ Less than half of eligible students manage to open a bank
account

14. Logistical issues
§ Many students don’t receive the award because they don't
open their account or don’t have a valid account.
§ Opening the account involves 3 steps:
§ 1) Documents in hand: ID, CPF (equivalent to SSN),
proof of residence of the students and parents (if younger
than 18)
§ 2) Register at the school (Student information is sent to
the bank)
§ 3) Go to the designated bank agency, bring all the
documents and sign the contract to VALIDATE the
account.
§ Focus groups: There is a lot of misunderstanding about those
procedures in the field.

15. Where is the leakage?

16. Poor students more likely to open account

17. Empirical strategy
§ Estimate regressions of schools, with school and year
effects:
yit =β0 +β1Accountit + Xit 'δ + μi
+ λt
+ εij
§ y is a measure of schooling outcomes: drop-out and
pass rates
§ Account is the % students that have a valid account
(continuous treatment in treatment group and zero
otherwise)

18. Empirical strategy (cont.)
§ Important:
§ We will underestimate the effects as we have
outcomes for the whole school, but only poor
students are eligible for the program
§ Endogenous selection for those that open an
account (will deal with this in the future)
§ Can also estimate an intention-to-treat effect using
the % of eligible students as treatment measure

19. Effects of program in 2011

20. Effects of program in 2011

21. Effects of program in 2012

22. Effects of program in 2012

23. Results: all grades
Drop-out rate Pass rate Repetition rate
(1) (2) (3) (4) (5) (6)
% valid accounts -0.107 -0.037 0.253 0.272 -0.146 -0.235
[0.039]*** [0.065] [0.046]*** [0.072]*** [0.037]*** [0.070]***
Effect for 10% increase -0.10 -0.03 0.04 0.04 -0.08 -0.12
Mean 11.22 11.22 69.43 69.43 19.335 19.335
School effects Y Y Y Y Y Y
Year effects Y Y Y Y Y Y
Municipal trends N Y N Y N Y
Demographics Y Y Y Y Y Y
R2 0.1 0.16 0.25 0.33 0.06 0.13
Observations 6,287 6,287 6,287 6,287 6,287 6,287

24. Concluding remarks and next intervention…
§ Low take-up for saving accounts due to logistical constraints
§ Still, we find significant increase in pass-rates and some
reductions in drop-out rates
§ Look at the effects on test scores and do analysis at
individual level rather than school level data

25. Concluding remarks and next intervention…
§ Low take-up for saving accounts due to logistical constraints
§ Still, we find significant increase in pass-rates and some
reductions in drop-out rates
§ Look at the effects on test scores and do analysis at
individual level rather than school level data
§ Future plans:
§ Information campaign to bring youth into the program
(many 1000s students still out)
§ Intervention to help youth use their resources better.
Mainly, those that graduate and that might end up with a
significant amount of resources