Should Income Grants in Poor Countries be Conditional or Unconditional?*

Abstract: The article starts by considering principle arguments pro and contra conditional and unconditional cash grants. It continues by reviewing empirical evidence about the effects and costs of such schemes. The results of six recent meta-studies and six recent single project studies are reviewed and assessed. Overall, the results are not unanimous, but a certain pattern of effects emerges. The conclusion is: If the aim is to immediately contribute to a reduction of poverty, unconditional cash transfers are a reasonable instrument. If the aim is to induce behavioral changes in order to overcome current and future poverty, conditional income grants with exit clauses may be preferable, not least because they are more effective, more efficient and more affordable