The Impact of Conditional Cash Transfers on Low-Income Individuals in Indonesia

Abstract

Most governments claim that Conditional Cash Transfer (CCT) programs benefit poor people. This study aims to analyze the impact of conditional cash transfers on low-income individuals in Indonesia. This study used consumption expenditures as a poverty measure and found that the Program Keluarga Harapan (PKH) has significant impact on an individual's consumption. However, households in the lowest wealth quantile were found to not take advantage of those benefits due to the current CCT design. Moreover, the heterogeneity of the CCT can generate substantial inequality, as household incomes in the lowest quantile fall. Therefore, governments should be more generous to households in the lowest wealth quantile, and carefully manage the program based on the needs of CCT beneficiaries.