An unconditional cash transfer policy provides households with income. A conditional cash transfer policy gives poor households cash if the children in the household spent at least H hours in school. To simplify, suppose that all home time not spent working is spent in school. Also, going to school is costless.

Graphically compare the impact of these policies, explaining what the graphs show. The effects will differ depending on whether the household's optimal quantity of home time (H = T L) under the unconditional cash transfer is less or greater than H. Compare the impacts of comparable unconditional and conditional policies on wellbeing and when (i) the optimal home time/school participation under unconditional cash transfer, HCT < H and when (ii) HCT > H.