In this article, the authors discuss the use of conditional cash transfers in the context of combatting poverty and spurring economic development. To shed light on the matter, the authors specifically focus on Mexico's Progresa program, one of the longest running CCT programs and one that is renowned for its initial randomized testing. While previous studies on the program have found that Progresa has had a positive impact on the education level of poor youths, these analyses have only focused on the short term effects. To add to the existing body of research, the authors want to explore the matter in the long term, focusing on the educational, labor market, household, and demographic outcomes for youths who grew up with the Progresa program. Through an empirical analysis, they find that poor youths who experienced the Progresa program before the transition from primary to secondary education had far better outcomes than those who experienced it when they were older. Specifically, these children who benefited from early exposure had more years of schooling, improved labor outcomes (like the transition from agricultural to non-agricultural work), higher housing quality, ownership of more durable goods, and higher geographic mobility. These results were especially strong for women, given their relative position in Mexican society.
I found this article, while very technical, to be especially insightful. Conditional Cash Transfer programs are a very popular topic in regard to economic development, and this study shows that they can be of real use in reducing poverty. Other third-world countries can look to Mexico and model a program based on theirs that will in turn promote economic equality. One thing that I am curious about, however, is the relationship between a country's culture and CCT programs. Previously, we have discussed notions like the "Protestant work ethic" and "Confucian Ethos" in regard to economic development. In the case of Mexico, how does culture influence the outcomes of CCT programs? Additionally, when comparing CCT programs between countries, how would one control for differences in culture?
In a previous blog post, I mentioned how I am familiar with the notion that women are better money managers within the family, given my experiences working in a township outside of Cape Town. Again, I would like to emphasize this finding, as the Mexican CCT program - knowing that there is a significant chance that the father spends the money inappropriately - sends payments to the mother of the family. It is very interesting for me to see this phenomenon stretch across two very different countries, Mexico and South Africa. What is it that makes women better money managers for the family? Clearly, it is not something related to culture, given the sharp cultural disparities between South Africa and Mexico. Are women inherently more financially responsible than men?
A question I have frequently found myself asking throughout sustainable development, environmental econ, and this class is "Okay, but how?". We learn about the need for certain things (education, decrease emissions, health, whatever it may be) but I often follow this up with "how are we going to get there?". This study was great to read because it showed how we can get there- an intervention that has direct effects on educational, labor market, household, and demographic outcomes. It's funny how money can so strongly influence behavior. While obviously the issues of sending your child to school vs wearing a mask are entirely different, I wonder how much better off we would be if a Covid intervention was conditional cash transfer for mask wearing. I bet a lot better.
Like Ben, I was also amused by the fact that all monetary grants were given to the mother of the family- this isn't the first time we have seen this happen in this class. Ben asked "Are women inherently more financially responsible than men?". Obviously we can't answer that question definitively, but I do think that women have a more long term mentality towards the betterment of their lives and their children's' lives.
Adding on to what we have been talking about in class, it is evident that an increase in investment in human capital increases lifetime earning potential - which can help alleviate poverty now as well as reduce poverty in the future. This study seemed to have conducted an extremely thorough analysis of conditional cash transfers with their analysis on Progresa in Mexico. Given that this study contains “the first estimates of the long-term impacts of an influential and nationwide CCT program on a generation of youth who have effectively grown up with it”, it is evident that this study looked at effects that were in need of analysis and are in need of further analysis. The extent to which Progresa reached its desired population was impressive - 6 million families or about 1/4 of all families in Mexico and a 97% rate of participation for families who were offered the program. One particular aspect that stuck out to me was that the grant, which represented about 2/3 of Mexico’s minimum wage, was given to the mother of the family (except upper-secondary school scholarships). This reminded me of our previous discussion about how women tend to be more monetarily responsible. The fact that they acknowledged that there may not be a rise in income in places where school quality is lacking reminded me of Kremer’s realization of the impact that intestinal worms had on children’s education. I thought it was interesting that genders experienced different results - another topic that we have been discussing. Progresa had led to growth in both labor force participation and education for females and “estimated effects on labor income are positive for both sexes but statistically significant only for women”. Female labor force participation increased participation by more than 1/4 and female labor income by more than 1/2. I think other countries should look at Mexico’s Progresa as this paper “provides new evidence that the intergenerational benefits of CCTs may be as large or as larger than current poverty effects.”
I do agree with the paper that conditional cash transfer programs such as Progresa are a good way to initially incentivize the youth to attend schooling and attain higher education. By providing conditional cash transfers, the attention is focused on the present. However, as income and wages go up over time for the youth that are receiving CCT’s, I would think that it may be worthwhile to increase educational quality in future generations; thus, reducing the diminishing marginal returns from education. Of course, a more in-depth look at the marginal costs and marginal benefits would need to be done in order to weigh whether additional investments in education will lead to further increases in income and wages. Also, it will be interesting to see how Progresa’s effect on the agricultural industry will affect the benefits of additional schooling, as Duflo mentions when cited in the paper. I hypothesize that an increase in educational attainment through the CCT programs will decrease the number of people in the agricultural industry and making it more beneficial to increase investment in not only educational attainment, but educational quality in the long-run.
This paper strongly affirmed much of what we have been learning in this class so far. Most importantly that development alone does not alleviate poverty. Policies such as CCT’s can be used effectively in developed and developing countries to both aid the current generation and make it so the next generation of individuals are able to thrive. I think this specific element of CCT policy is important. Politically, it is difficult to rationalize spending particularly if the benefits of that spending are not realized. Here, it became clear that CCT’s really do provide lasting intergenerational benefits far beyond the scope of the cost of those policies. I found the differences in outcomes between males and females to be interesting particularly as we have discussed this potential gender difference before. Regardless, the evidence was overwhelmingly positive. When reading this I was thinking largely about unemployment and unemployment benefits in the United States. Often, it is argued that these benefits, particularly if they are cash transfers, will not be used productively. Many simply do not believe in cash transfers in an effort to alleviate poverty. While this study does not address whether or not cash transfers should be conditional, I think it is important to think about why this may be more politically possible. Conditional transfers necessarily invoke an idea that “work” of some sort must be completed in order to receive a benefit. Perhaps psychologically this idea makes it easier for those who oppose large unemployment benefits or safety nets to allow the government to spend more on these programs. When payment is conditional, regardless of what that condition is, I would argue that politically it is more difficult to argue against. Going forward, I would be interested to see how politicians in both the United States and other countries use the information in this paper and adopt it in different ways. Intergenerational benefits are incredibly promising and ought not to be underestimated.
I find the concept of conditional cash transfers really interesting, and it’s crazy to think that they have only been around since the 90s. As the article explains, they have proven to be effective from evaluation in the short run, however, there has not been as much research in the long run, partially because there has not been much of a long run for evaluation. As Mexico has progressed since the implementation of CCTs, Parker and Vogl’s paper shows the benefits of CCTs in the long run, especially for the people whose family received a cash transfer during their primary schooling. Parker and Vogl’s work helps to prove the effectiveness of CCTs for the long run. Everyone sees benefits from programs like this. There are benefits to women, education, health, and development from this policy that support what we have learned in class. Other countries have implemented similar policies as a result of this.
One thing that was mentioned in the paper was the idea of conditional versus unconditional cash transfers. I wonder how unconditional cash transfers would impact human capital in the long run. The authors cited that little research had been done on this form of anti-poverty policy as well
The idea of conditional cash transfers uses the “teach a man to fish” idea of investing in education to improve conditions in the future. This article analyzes the long term effects of the Progresa, the Mexican conditional cash transfer program used to encourage families to keep their children in school in order to receive the cash benefits. By targeting the poorest, most marginalized communities, the program both alleviated immediate poverty with the cash transfers, and ideally alleviated poverty for the students as their additional education would allow them opportunities to participate in the workforce or make more income. Once again, the article emphasises the importance of educating women, as the program appeared to have the most impact on girls who were able to stay in school longer as a result of the CCT. Interestingly, the article mentioned that the cash transfers were given to the mothers in the family, which I’m not sure is a result of women being perceived as primary caretakers of their children or the association of women with responsible financial decision making, more likely to invest the money back into the children. The article mentions but does not offer conclusions on the debate between conditional vs unconditional cash transfers, but the evidence presented is overwhelmingly positive about the long term effects of CTCs and the potential to break the cycles of intergenerational poverty. It would be interesting to see if a similar policy would ever be considered in the US given this evidence, targeting the most marginalized groups with the highest dropout rates with CTCs.
The evidence presented in this paper regarding the long-run benefits of CCT’s was absolutely fascinating. Like Didi, I also often wonder how the theoretical approaches to alleviating poverty and increasing human capital should or will work in practice. Reading this paper therefore answered some of those questions, since it’s often easy to make general statements such as “investment in education should be increased” without actually giving an example of how that would play out. This paper therefore provides a concrete example of a way in which not only families receive additional income in the present, but also the children are able to increase educational attainment, and consequently wages and labor force participation in the future. Like many of my peers have indicated in their blogs already, I was particularly interested in the fact that these positive effects of CCT’s are significantly greater for women. I think this demonstrates what we have talked about a lot in class already regarding the importance of investment in human capital for women. I also found it interesting that the actual cash transfers are given to the mother as opposed to the father. I would be interested to know how this money is actually spent in practice, and what specifically the benefits are to giving it to women, and how this would contrast against the ways men would spend the money. I wonder if there are additional positive spillover effects on educational attainment when women are the decision-makers in how the additional income is spent. I also found it interesting that Progresa was shown to decrease work in the agricultural sector by 10-12 percentage points, and what the relationship of this finding would be to the Lewis Two-Sector model. As the cohorts grow older, it will be interesting to see the impact of this decrease in agricultural work on development. Given this evidence of the numerous long-run positive impacts of Progresa, I also wonder what other countries have done or will do in response to these findings. I am curious as to what the level of support is for this program across Mexico, and whether it has been widely supported or faced any criticism. Like Jack explained in his response, the political climate is a huge factor in whether these types of programs are even feasible in certain countries. In light of this evidence, it is clear that similar CCT programs could be incredibly beneficial in both developed and developing countries. As the paper explains, it is important that further empirical analysis be done on the CCT’s in other countries. I would be surprised if the Mexico case is an anomaly, and would like to know to what extent they have worked, or not worked in other countries, and to know if the structure of Progresa is what has led to its incredible success.
I found the study of this cash transfer program to shed a tremendous amount of light on how our theory of human capital investment works in practice. I am constantly reminded, as I am with many things in this class, that the issues we are dealing with are valuable in multiple ways. First, it is a useful investment to be made because the societal benefits outweigh the costs. Second, it is a necessary investment because we are talking about investing in the ability for people to have a basic level of freedom in their lives. Specifically when I think about the issue of investing in women, it is almost reassuring that the benefits to be derived from this investment are so glaring. I almost think that there is more hope that we will invest in women, given the unfortunate circumstances of a world in which men have historically been the main benefactors, since there is so much more to be gained. I also think, on the side of intrinsic value side, that the fact that all three aspects discussed in the paper are so clearly benefited, that hopefully these cash transfer programs will continuously be utilized as poverty alleviation methods. The last thing which I wanted to talk about was the idea of transferring these funds to the mothers of the households. I thought that this was a brilliant concept given what we have discussed and learned in this class. we have learned that women have preferences which will lead more to investment in their child's human capital investment. Especially as it pertains to nutrition. I was thinking of how in the India paper, we talked about how female policy makers identified clean water as one of their primary concerns. I wonder if thoughts like this, and what these mothers might invest their money in, would lead directly to the reduction of health ailments in their children, which as we have discussed, is sometimes a limiting factor in educational and labor force attainment.
I had never heard of the concept of conditional cash transfers (CCTs) until reading this article. I think it is a brilliant idea in that families and individuals are rewarded for good merits such as consistently attending school and having a strong academic performance. I also think the idea of planning to alleviate current poverty while also having the effect of reducing poverty in the next generation is ingenious. It seems intuitive that, on average, the families who receive CCTs will perform significantly better in terms of earnings and educational attainment. With that being said, it is unfortunate that there are no long term studies yet simply because not enough data is available. It is remarkable how CCTs have only been aroudn since the 90s--it seems like such a concept would have been around for a longer time.
One concern I have about CCTs is that we could see a essentially no effect from them if a poor household was hit by a catastrophe such as the breadwinner of a household losing his/her job, a natural disaster, etc. Such an effect could greatly diminish the effects of CCTs and ultimately cause for a large decrease in lifetime earnings for families / individuals that receive such grants.
In this class as well as some of my other classes we have often discussed how poverty is a cycle, and that it often impacts generation as it can be very hard to escape from. This is often due to the fact that budget constraints of parents limit their capability to supply inputs to human captial such as good health, nutrition, and education to their children. According to this paper CCT programs such as Progresa are the perfect way to not only improve the lives of individuals at the present moment, but also to break intergenerational cycles of poverty. This paper provides sufficient evidence that CCTs have intergenerational benefits that are as large or larger than current poverty effects. The study did this through showing that after the implementation of Progresa there were large effects on the subsequent generation’s educational attainment, work, earnings, and household economic status. It found that these gains were particularly high for women, which is especially important given other studies that suggest that investments in women’s education have substantially large spillover benefits. Furthermore, gains in education and earnings for women is also an important aspect to increase the agency of women and thus makes CCT programs even more important. In this paper it was fascinating to analyze the relationship between our current topic of human capital and the past topic of gender.
Additionally, something I wonder about is how important are incentives. CCTs reward families who meet certain criteria. Essentially, welfare programs are conditional upon the receiver’s actions. I wonder if it is necessary to make them conditional upon certain behaviors in order to see the benefits observed in this paper or if other welfare programs that aren’t conditional would still cause similar benefits.
Parker and Vogl's paper provides us with a brilliant example of a program that invests in human capital and displays tangible outcomes that alleviate poverty in third world countries. It was highly interesting to see the theories we learned in class put to practice and encouraging to know that these policies are effective and even intergenerational. This paper builds off of previous research done with cash transfer programs to see if they have long term effects, which they do. This makes sense, as parents would try to "pass on" their values and prioritization of education to their children and would now have the means to expose their children to such opportunities. This suggests that similar policies and programs would create a wave effect that provides future generations with opportunities to better their lives through higher education, better income, more participation in the labor force, higher social status, etc. What I found most interesting in this paper is that the CCTs had a more noticeable positive effect on women than men, which connects to previous papers we read and the discussions we had in class. More women were able to participate in the labor force, and as we learned in previous classes, this has a plethora of positive effects (and spillover effects) as women start making their own income and become more financially and socially independent. I am highly curious as to how the cash transfer programs worked out in countries other than Mexico, such as those in Asia and Africa, and if the shift from agricultural to non-agricultural sectors is a universal effect (I am sure it is, but I am specifically curious about the shift in countries with economies that highly depend on agriculture).
This study illustrates the highly significant role that conditional cash transfers play in increasing educational attainment for young people in Mexico. Childhood exposure to Progresa raised the probability of completing high school by 10-15 percentage points for both sexes. Further, “the secondary and high school impacts range from 40 to 70 percent of baseline rates” (21). When turning to the long-run impacts of Progresa, the study indicated that increases in education may translate to improved outcomes in the labor market, but noted the endogeneity of such results (21).
In my opinion, the most interesting aspect of these results was how it related to advancements specifically for women. In both areas, Progresa has led to “striking growth” for young adult women. While male education has increased by similar amounts, Progresa’s impact on male labor supply and sectoral affiliation has been more modest compared to its impact on women. Further, “estimated effects on labor income are positive for both sexes but statistically significant only for women” (23). These findings relate directly back to our class discussion in previous weeks on the significantly influential impacts of increased educational attainment for women. They indicate that women empowerment in a developing economy has greater returns of investment than males. This leads not only to improvements in the economy, but also to intrinsic benefits for women that live in systemically inferior positions.
All in all, while this study expands the conversation of conditional cash transfers by bringing in the facet of intergenerational benefits, I am left wondering what effects programs like Progresa have in other countries around the world. Progresa has taken off since the late 1990s, and currently covers one quarter of all families in Mexico. About two thirds of these families derive from rural communities. In countries with a larger urban poor, how do the impacts of conditional cash transfers differ there? Are the effects more or less significant? Further, what are their effects where they are used in countries that are already much more developed, like the US? Therefore, while this study is an effective case study that broadens the timeline of the conversation, I would be interested to hear more on the geographically diverse impacts of conditional cash transfers.
The last paragraph of this paper caught my attention. The authors write that for conditional transfers to be preferable to unconditional transfers, they must improve the lives of children. They state that “short-run benefits like increases in school enrollment do not on their own meet this standard, unless one views enrollment as having intrinsic rather than instrumental value.” For this reason, they write, their evidence of long run benefits is necessary, though not sufficient. I do agree that evidence of long-run benefits has significant implications for CCT programs and policymakers. However, I disagree with their implication about the (lack of) intrinsic value of enrollment. The use of the word ‘unless’ in the statement above implies that there may not be intrinsic value in school enrollment. I would argue that there is intrinsic value in children’s school enrollment, and that we cannot lose sight of this when we talk about and try to measure the instrumental value of education. In thinking about Sen’s work and our discussions of freedoms and capabilities, I believe that children have a right to education. To deny them education is an unfreedom; the ability or freedom to go to school therefore has intrinsic value. And since children’s school attendance is almost entirely dictated by their parents, it seems to me that we ought to do everything we can to incentivize parents to enroll their children in school and eliminate this unfreedom that so many children face. Because I believe that there is intrinsic value in the freedom or opportunity children have to attend school, and because CCT programs provide incentives for parents to send their children to school and have been shown to increase enrollment, I think the merit of such programs shouldn’t be judged only by examining the instrumental value of education.
I found Parker and Vogl’s work on conditional cash transfers interesting as well as supportive of topics we have previously discussed in class. I enjoyed seeing data points which support the hypothesis that targeting specific groups can see larger impacts on human capital. First, there is substantial evidence that Mexico’s Progresa program has provided opportunities for young women. Not only through greater labor force participation but also through opportunities for migration. Second, Progresa is focused on low-income regions of Mexico and shows large returns for these groups, further supporting our discussion of how targeting populations of lower economic status can lead to greater returns from human capital investment. Finally, the study is founded on the understanding that returns from human capital investment are largest for children who have yet to make the transition from primary to secondary school. We had previously discussed how all three of these population groups would most largely benefit from poverty programming, and this paper presents concrete support for long-term gains of conditional cash transfers.
Prior to reading this paper, I was unfamiliar with the Progresa program. However, as discussed above, I was happy to find that the program seemed well reasoned in its approach towards building human capital in vulnerable populations. Of particular note, I found it interesting that the cash transfers were provided to the mother of the child in order to hopefully ensure the greatest amount of spending on the child as possible. A question that constantly comes up throughout the paper is the comparison between conditional and unconditional programs. I am interested to learn more about the differences in results for these two types of programs. I think that conditional cash transfers make logical sense as they help to ensure that money is spent in a productive way. However, as we have discussed in class, low-income households act in rational ways in order to improve their livelihood and it seems that conditional programs could exclude certain highly vulnerable households by casting the net too narrowly. A combination of both programs seems sensible as completely cutting funding for low-income households after the child fails a grade more than once seems unreasonable since there could be exogenous factors preventing that child’s success. Until I learn more about the differences and researchers investigate more long term outcomes, I can only provide my initial reactions.
Conditional Cash Transfers contribute to our recent class discussions about investments in human capital. CCTs incentivize low income families to invest in their children's education. The changes in the educational attainment have to the potential to then change the labor market structure of a country. I agree with the paper that these CCT programs like Progresa are great ways to invest in low income families and help poverty issues. I also found it interesting that these programs seem to work in both developing and already developed countries. In past classes we have warned against trying to find "one-size fits all" solutions to problems. In this case it seems that the Conditional Cash Transfers are very versatile in the environments in which they work.
One quote that caused me to pause was "program rules allow students to fail each grade once, but if a student repeats a grade twice, the schooling benefits are discontinued permanently". I think this is a bit harsh, and like Mason mentioned, what if a family experienced a tragedy or a natural disaster and their circumstances changed drastically. The situation could be resolved in a few years, but what if in that time a child happened to fail a grade twice? The family's benefits for this child would be gone forever for something that was beyond their control. Although, this rule keeps families from taking advantage of the CCT system I think that it has the possibility to exclude families that actually want to benefit from the program.
CCTs also show how investments in human capital have multigenerational impacts. I think that is more incentive for parents to participate in these programs, knowing that the effects their investments will last instead of potentially being temporary. Its interesting how to CCT has differing impacts among gender. In my blog last week, I noted that the gap in returns for educational investment between girls and boys is increasing. I think this relates to how the positive effects of CCTs are greater in females than in males.
I found it particularly refreshing to read about an actual program that we have long term data for, and therefore, actual results. In a lot of ways, the concept of conditional cash transfers seems simple: give people the incentive to do things that will benefit them, their children, and society/the economy. However, as we have talked about in class, many people have the (wrong) belief that people are poor because they are lazy or dumb. The reality is the lack of opportunity and the inability to invest in themselves.
The most important result to me is the increase in labor market participation by women. The increase can be attributed nearly in full to "increases in paid work." This, of course, seems like it should be obvious that money talks, but so many women were not participating in the labor market because they weren't able to earn enough to be worthwhile to them. Meanwhile, there is little impact on participation or wage for men, which only show how large the discrepancy was to begin with. Overall, the program serves as a great jumping off point for similar programs to mimic and improve upon. From a policy perspective, the results are clear and should promote more spending.
I think the most crucial point to note about CCTs is that their goal is to not only alleviate poverty in the short term, but to also reduce poverty in future generations. This study clearly illustrates the beginnings of this second goal, since enough time has passed after Progresa was created to see longer-term effects such as on labor market outcomes. However, I would imagine CCTs will have even more extensive effects that researchers will not be able to ascertain until much more time has passed. Simply based on the human capital theory, an initial investment in a child’s education will increase their own lifetime earnings potential. However, the higher levels of both education and income will lead them to invest more in their own children, regardless of whether or they receive a cash transfer. If this is true, then just one round of CCTs would be effective in reducing poverty several generations down the line. Of course, this is impossible to measure empirically since Progresa was not created until 1997.
I’m also interested in the differential impact on men versus women with regards to labor market participation, especially since the increase in education was very similar for both genders. I don’t recall reading an explanation as to why this occurred, but I would hypothesize that this is because men are probably expected to enter the labor market regardless of the level of education that they receive. Women, on the other hand, are likely encouraged or forced to participate in household production, and thus the additional education allows them to more easily transition to the labor market, possibly because of increased intra-household bargaining power. Whatever the reason, the added benefit for women represents another success for Progresa in achieving economic development.
The two things that stood out the most to me about this look into CCT was that the Mexican program gave the money to the mother of the household and they're hint at future discussion of whether conditional cash transfers are more/less effective than unconditional cash transfers. As some of my peers have said in their posts, as well as discussions we have had in class, when the maternal powers are given control of the household finances, historically the result is higher levels of education and healthier diets. I think this is an important facet of the CCT program because it helps to ensure that the additional income with go towards the intended causes. If the income were spent on other, insignificant goods with lower levels of return or even goods and services with relative short run return, we may not seem the same levels of significant long term positive outcomes. As for the debate between cash transfers being conditional versus unconditional, I think my gut reaction is conditional makes more sense because giving families additional income, while important, may not result in the same levels of education attained for the children. I do see the argument that higher levels of income will result in higher levels of education and future income, but I think there could be a significant difference between those results if the child was still ensured to attend school. I would be interested to hear more about the difference.
I found this to be a very interesting read. Conditional cash transfers can be very effective incentives in encouraging certain behaviors, especially amongst those most strapped for cash. I enjoyed reading about the Progresa program, as I'd only really read about the Bolsa Familia program in Brazil prior to this article. It was interesting to see similarities and differences in how the two Latin American countries constructed these programs.
I enjoyed how, like the class example about the grandmother receiving the money, the mother's of the households did here. I'm curious about the extent to which this impacted the women labor participation numbers cited in the article, would that number be lower if it went to men? It is always something that I find to be interesting, a decision that's unconventional but has strong support from research. The results of the Progressa program also showed how investments in human capital lead to different outcomes across generations, continuing to pay dividends beyond just the initial investment.
I'm also curious to see the cons of doing these conditional programs over unconditional ones. I personally gravitate towards the former due to the incentives it provides, but it does exclude people from aid who are in environments where it is more difficult for them to meet the standards set. I'm curious as to factors that could prevent people from earning conditional aid. I'm also curious about the expenses associated with ensuring people meet the conditions. Sometimes these can not be economical, ie drug testing as a condition for welfare aid in the US.
¡¡México!! Reading about my country was interesting because it has faced many economic struggles but the Progresa program actually seemed to be efficient (yay).
Given that studies have shown conditional cash transfer’s positive impacts on youth’s education, labor market outcomes, housing, geographic mobility, and asset ownership, I’d be interested to dive more into what obstacles are holding governments back from fulfilling this need. I can expect citizen pushback, especially from people in the upper class who don’t personally benefit from it. Nonetheless, the most vulnerable populations- poor children, girls/women, etc- benefit greatly from it and the empowerment of disenfranchised communities leads to economic development, as we’ve discussed thoroughly in class. The country’s growth would holistically benefit countries given that investment in education has many spillover effects. Therefore, it makes sense for them to implement a CCT program. The anti-poverty efforts with early intervention have long term returns to investment and could clearly pave the way for a more advanced economy, yet other countries are lagging in their efforts to bridge the gap in educational attainment, particularly for low-income households who could use financial incentives to be encouraged to keep their kids in school.
One thing I found interesting was that this initiative also benefits developed countries, including the United States, as opposed to just developing countries. I doubt that we would actually see that happen within the next few years (especially if next week’s election goes south), but it’d be worth giving a try and analyzing similarities and differences between countries who have successfully executed this program and the United States’ attempt at doing so. People from developing countries wouldn’t rely as heavily on migration for social mobility and a more stable lifestyle in general. The addition to human capital obviously benefits migrants’ destination countries, and I think we would still see that, but I am assuming to a lesser extent. Overall, I am glad the country decided to implement this and there's research to prove its efficiency, so I hope other countries can follow the lead.
I really enjoyed reading about the Progresa program. Clearly, conditional cash transfers provide excellent incentives to keep children in school, which unsurprisingly has led to significant long-term effects on labor force participation, wages, and even consumption. Matt and I were talking about our final paper earlier today and discussed (as he mentions above) the paper we read about giving welfare to a female member of the household versus giving it to the male member of the household, and how it was distributed more efficiently. I wonder how this was done with the Progresa program; clearly, there are stronger returns for women than men here: would they be stronger if the money was given directly to the woman? Though this research shows that agency was provided to these women through increased labor force participation and migration ability, perhaps that would be yet another way to increase autonomy.
I'm also curious about the benefit of unconditional cash transfers; how beneficial are they as compared to conditional cash transfers? We talk a lot in the Shepherd program about providing autonomy to those experiencing poverty, and I'm wondering how that money would be allocated differently if it were given unconditionally. Do we have a moral responsibility to provide families with that autonomy, or is it better to regulate certain aspects of these cash transfers?
“Do Conditional Cash Transfers Improve Economic Outcomes in the Next Generation? Evidence from Mexico" by Susan W. Parker and Tom Vogol draw from Esther Duflo’s research contributions that suggest school construction programs in poor and rural areas provide large long-run benefits and attempt to see if Progresa could do so in Mexico. Fortunately, aligning with previous discussions we have had investments in human capital especially education prior to the age of twelve do, indeed, have a tangible impact on economic productivity and Parker and Vogol even assert that CCTs have intergenerational effects on the nation’s productivity. The author’s were sure to include, “While education is likely to be an important mechanism, we do not attempt to distinguish it from other potential mechanisms, such as greater parental income during childhood.” acknowledging the multitude of potential confounding factors that prevent families from sending their kids to school in the first place. A final piece of the work that especially caught my eye was the magnitude of benefits of involving women in the process of CCT. First, Progresa was sure to let mothers become the direct recipients of this inflow. Table1 displays that at grades seven and above, the grants are higher for girls than boys to account for a historic disparity showing higher dropout rates among girls than among boys after primary school. Luckily this decision paid off immensely Parker and Vogol mention, “for women, childhood program exposure increases labor market participation 7-11 percentage points,” documenting the returns on investment in mobilizing a previously neglected demographic.
Parker & Vogls' paper on the long-term impact of Mexico's conditional cash transfer program reminds me of my own experience with need-based financial aid. Although, the severity of poverty experienced between me and the observations in the study are different and my financial aid is not conditional, the idea of human capital investment remains consistent. In the absence of aid, I would not have obtained the education I did at W&L and would have probably been enrolled in a community college. Although I would have still had access to some higher education, my returns in the future would probably not have been as high without a W&L education. I would have probably remained at the same social and economic status as my parents and pass down the same structural obstacles I faced as a low-income student onto my children. In the case of Progresa, the paper shows evidence that children whose families were receiving these conditional cash transfers experienced long-term economic and social mobility. This finding suggests that in the absence of the program, they would not have experienced the positive effects that equated or superseded poverty effects on their economic and social development.
Just as the government is providing a human capital investment on me to increase my future productivity, Progresa seeks to invest in a poor cohort whose potential productivity may be suppressed by poverty effects. Therefore, Progresa does not only care about present poverty, but it also cares about maximizing future returns by investing in untapped production. This makes me wonder how much intellectual and financial output we have lost due to our reluctance to enhance the economic and social well-being of those in poverty.
It is very interesting to consider how vast and dramatic the effects are of effective anti-poverty policies, especially so in lower-income countries such as Mexico. In this case, CCTs have been shown to dramatically improve educational attainment as well as labor market outcomes for children who received these benefits before their transition from primary to secondary school. The researchers further explained that these benefits were not observed for individuals who were at least 15, or who had surpassed the time period of transition from primary to secondary school.
I think that this paper has helped to further some strong assumptions in my mind at this point after learning as much as we have about development and anti-poverty policies. Firstly, well-targeted anti-poverty measures can have dramatic positive effects when targeted to the least affluent families. This is true in this example as Mexico itself is a less-wealthy nation than developed nations in its proximity, such as the United States and Canada. Furthermore, the CCTs that the Mexican government implemented were largely experienced by individuals in the poorest areas of the country, with the majority of the recipients being rural families. Even a nation such as Mexico, which I don't know much about but could assume that their government budget is not as vast and flexible as that of the United States for instance, is able to benefit greatly by re-allocating some money to their poorest families, where benefits will be seen most greatly.
A second major assumption is that the greatest benefits will be experienced by individuals who are still children at the time of receiving the benefit. The younger the child is, the more they could be impacted by improvements in wealth, allowing for greater rates of educational attainment and long-run labor market outcomes as described in this paper. I think this is true across the board - early childhood education and monetary improvements can prove to be the most beneficial to improve the economic situations of families and bring families and individuals out of abject poverty. I think these two assumptions prove to be very useful in thinking about effective anti-poverty measures both in developed and less-developed nations.
In this article, the authors discuss the use of conditional cash transfers in the context of combatting poverty and spurring economic development. To shed light on the matter, the authors specifically focus on Mexico's Progresa program, one of the longest running CCT programs and one that is renowned for its initial randomized testing. While previous studies on the program have found that Progresa has had a positive impact on the education level of poor youths, these analyses have only focused on the short term effects. To add to the existing body of research, the authors want to explore the matter in the long term, focusing on the educational, labor market, household, and demographic outcomes for youths who grew up with the Progresa program. Through an empirical analysis, they find that poor youths who experienced the Progresa program before the transition from primary to secondary education had far better outcomes than those who experienced it when they were older. Specifically, these children who benefited from early exposure had more years of schooling, improved labor outcomes (like the transition from agricultural to non-agricultural work), higher housing quality, ownership of more durable goods, and higher geographic mobility. These results were especially strong for women, given their relative position in Mexican society.
I found this article, while very technical, to be especially insightful. Conditional Cash Transfer programs are a very popular topic in regard to economic development, and this study shows that they can be of real use in reducing poverty. Other third-world countries can look to Mexico and model a program based on theirs that will in turn promote economic equality. One thing that I am curious about, however, is the relationship between a country's culture and CCT programs. Previously, we have discussed notions like the "Protestant work ethic" and "Confucian Ethos" in regard to economic development. In the case of Mexico, how does culture influence the outcomes of CCT programs? Additionally, when comparing CCT programs between countries, how would one control for differences in culture?
In a previous blog post, I mentioned how I am familiar with the notion that women are better money managers within the family, given my experiences working in a township outside of Cape Town. Again, I would like to emphasize this finding, as the Mexican CCT program - knowing that there is a significant chance that the father spends the money inappropriately - sends payments to the mother of the family. It is very interesting for me to see this phenomenon stretch across two very different countries, Mexico and South Africa. What is it that makes women better money managers for the family? Clearly, it is not something related to culture, given the sharp cultural disparities between South Africa and Mexico. Are women inherently more financially responsible than men?
Posted by: Ben Graham | 10/29/2020 at 01:21 PM
A question I have frequently found myself asking throughout sustainable development, environmental econ, and this class is "Okay, but how?". We learn about the need for certain things (education, decrease emissions, health, whatever it may be) but I often follow this up with "how are we going to get there?". This study was great to read because it showed how we can get there- an intervention that has direct effects on educational, labor market, household, and demographic outcomes. It's funny how money can so strongly influence behavior. While obviously the issues of sending your child to school vs wearing a mask are entirely different, I wonder how much better off we would be if a Covid intervention was conditional cash transfer for mask wearing. I bet a lot better.
Like Ben, I was also amused by the fact that all monetary grants were given to the mother of the family- this isn't the first time we have seen this happen in this class. Ben asked "Are women inherently more financially responsible than men?". Obviously we can't answer that question definitively, but I do think that women have a more long term mentality towards the betterment of their lives and their children's' lives.
Posted by: Didi Pace | 10/29/2020 at 02:27 PM
Adding on to what we have been talking about in class, it is evident that an increase in investment in human capital increases lifetime earning potential - which can help alleviate poverty now as well as reduce poverty in the future. This study seemed to have conducted an extremely thorough analysis of conditional cash transfers with their analysis on Progresa in Mexico. Given that this study contains “the first estimates of the long-term impacts of an influential and nationwide CCT program on a generation of youth who have effectively grown up with it”, it is evident that this study looked at effects that were in need of analysis and are in need of further analysis. The extent to which Progresa reached its desired population was impressive - 6 million families or about 1/4 of all families in Mexico and a 97% rate of participation for families who were offered the program. One particular aspect that stuck out to me was that the grant, which represented about 2/3 of Mexico’s minimum wage, was given to the mother of the family (except upper-secondary school scholarships). This reminded me of our previous discussion about how women tend to be more monetarily responsible. The fact that they acknowledged that there may not be a rise in income in places where school quality is lacking reminded me of Kremer’s realization of the impact that intestinal worms had on children’s education. I thought it was interesting that genders experienced different results - another topic that we have been discussing. Progresa had led to growth in both labor force participation and education for females and “estimated effects on labor income are positive for both sexes but statistically significant only for women”. Female labor force participation increased participation by more than 1/4 and female labor income by more than 1/2. I think other countries should look at Mexico’s Progresa as this paper “provides new evidence that the intergenerational benefits of CCTs may be as large or as larger than current poverty effects.”
Posted by: Christina Cavallo | 10/29/2020 at 02:56 PM
I do agree with the paper that conditional cash transfer programs such as Progresa are a good way to initially incentivize the youth to attend schooling and attain higher education. By providing conditional cash transfers, the attention is focused on the present. However, as income and wages go up over time for the youth that are receiving CCT’s, I would think that it may be worthwhile to increase educational quality in future generations; thus, reducing the diminishing marginal returns from education. Of course, a more in-depth look at the marginal costs and marginal benefits would need to be done in order to weigh whether additional investments in education will lead to further increases in income and wages. Also, it will be interesting to see how Progresa’s effect on the agricultural industry will affect the benefits of additional schooling, as Duflo mentions when cited in the paper. I hypothesize that an increase in educational attainment through the CCT programs will decrease the number of people in the agricultural industry and making it more beneficial to increase investment in not only educational attainment, but educational quality in the long-run.
Posted by: Austin Lee | 10/29/2020 at 04:01 PM
This paper strongly affirmed much of what we have been learning in this class so far. Most importantly that development alone does not alleviate poverty. Policies such as CCT’s can be used effectively in developed and developing countries to both aid the current generation and make it so the next generation of individuals are able to thrive. I think this specific element of CCT policy is important. Politically, it is difficult to rationalize spending particularly if the benefits of that spending are not realized. Here, it became clear that CCT’s really do provide lasting intergenerational benefits far beyond the scope of the cost of those policies. I found the differences in outcomes between males and females to be interesting particularly as we have discussed this potential gender difference before. Regardless, the evidence was overwhelmingly positive. When reading this I was thinking largely about unemployment and unemployment benefits in the United States. Often, it is argued that these benefits, particularly if they are cash transfers, will not be used productively. Many simply do not believe in cash transfers in an effort to alleviate poverty. While this study does not address whether or not cash transfers should be conditional, I think it is important to think about why this may be more politically possible. Conditional transfers necessarily invoke an idea that “work” of some sort must be completed in order to receive a benefit. Perhaps psychologically this idea makes it easier for those who oppose large unemployment benefits or safety nets to allow the government to spend more on these programs. When payment is conditional, regardless of what that condition is, I would argue that politically it is more difficult to argue against. Going forward, I would be interested to see how politicians in both the United States and other countries use the information in this paper and adopt it in different ways. Intergenerational benefits are incredibly promising and ought not to be underestimated.
Posted by: Jack Parham | 10/29/2020 at 04:11 PM
I find the concept of conditional cash transfers really interesting, and it’s crazy to think that they have only been around since the 90s. As the article explains, they have proven to be effective from evaluation in the short run, however, there has not been as much research in the long run, partially because there has not been much of a long run for evaluation. As Mexico has progressed since the implementation of CCTs, Parker and Vogl’s paper shows the benefits of CCTs in the long run, especially for the people whose family received a cash transfer during their primary schooling. Parker and Vogl’s work helps to prove the effectiveness of CCTs for the long run. Everyone sees benefits from programs like this. There are benefits to women, education, health, and development from this policy that support what we have learned in class. Other countries have implemented similar policies as a result of this.
One thing that was mentioned in the paper was the idea of conditional versus unconditional cash transfers. I wonder how unconditional cash transfers would impact human capital in the long run. The authors cited that little research had been done on this form of anti-poverty policy as well
Posted by: Gus Wise | 10/29/2020 at 04:28 PM
The idea of conditional cash transfers uses the “teach a man to fish” idea of investing in education to improve conditions in the future. This article analyzes the long term effects of the Progresa, the Mexican conditional cash transfer program used to encourage families to keep their children in school in order to receive the cash benefits. By targeting the poorest, most marginalized communities, the program both alleviated immediate poverty with the cash transfers, and ideally alleviated poverty for the students as their additional education would allow them opportunities to participate in the workforce or make more income. Once again, the article emphasises the importance of educating women, as the program appeared to have the most impact on girls who were able to stay in school longer as a result of the CCT. Interestingly, the article mentioned that the cash transfers were given to the mothers in the family, which I’m not sure is a result of women being perceived as primary caretakers of their children or the association of women with responsible financial decision making, more likely to invest the money back into the children. The article mentions but does not offer conclusions on the debate between conditional vs unconditional cash transfers, but the evidence presented is overwhelmingly positive about the long term effects of CTCs and the potential to break the cycles of intergenerational poverty. It would be interesting to see if a similar policy would ever be considered in the US given this evidence, targeting the most marginalized groups with the highest dropout rates with CTCs.
Posted by: Adelaide Burton | 10/29/2020 at 04:42 PM
The evidence presented in this paper regarding the long-run benefits of CCT’s was absolutely fascinating. Like Didi, I also often wonder how the theoretical approaches to alleviating poverty and increasing human capital should or will work in practice. Reading this paper therefore answered some of those questions, since it’s often easy to make general statements such as “investment in education should be increased” without actually giving an example of how that would play out. This paper therefore provides a concrete example of a way in which not only families receive additional income in the present, but also the children are able to increase educational attainment, and consequently wages and labor force participation in the future. Like many of my peers have indicated in their blogs already, I was particularly interested in the fact that these positive effects of CCT’s are significantly greater for women. I think this demonstrates what we have talked about a lot in class already regarding the importance of investment in human capital for women. I also found it interesting that the actual cash transfers are given to the mother as opposed to the father. I would be interested to know how this money is actually spent in practice, and what specifically the benefits are to giving it to women, and how this would contrast against the ways men would spend the money. I wonder if there are additional positive spillover effects on educational attainment when women are the decision-makers in how the additional income is spent. I also found it interesting that Progresa was shown to decrease work in the agricultural sector by 10-12 percentage points, and what the relationship of this finding would be to the Lewis Two-Sector model. As the cohorts grow older, it will be interesting to see the impact of this decrease in agricultural work on development. Given this evidence of the numerous long-run positive impacts of Progresa, I also wonder what other countries have done or will do in response to these findings. I am curious as to what the level of support is for this program across Mexico, and whether it has been widely supported or faced any criticism. Like Jack explained in his response, the political climate is a huge factor in whether these types of programs are even feasible in certain countries. In light of this evidence, it is clear that similar CCT programs could be incredibly beneficial in both developed and developing countries. As the paper explains, it is important that further empirical analysis be done on the CCT’s in other countries. I would be surprised if the Mexico case is an anomaly, and would like to know to what extent they have worked, or not worked in other countries, and to know if the structure of Progresa is what has led to its incredible success.
Posted by: Olivia Indelicato | 10/29/2020 at 04:58 PM
I found the study of this cash transfer program to shed a tremendous amount of light on how our theory of human capital investment works in practice. I am constantly reminded, as I am with many things in this class, that the issues we are dealing with are valuable in multiple ways. First, it is a useful investment to be made because the societal benefits outweigh the costs. Second, it is a necessary investment because we are talking about investing in the ability for people to have a basic level of freedom in their lives. Specifically when I think about the issue of investing in women, it is almost reassuring that the benefits to be derived from this investment are so glaring. I almost think that there is more hope that we will invest in women, given the unfortunate circumstances of a world in which men have historically been the main benefactors, since there is so much more to be gained. I also think, on the side of intrinsic value side, that the fact that all three aspects discussed in the paper are so clearly benefited, that hopefully these cash transfer programs will continuously be utilized as poverty alleviation methods. The last thing which I wanted to talk about was the idea of transferring these funds to the mothers of the households. I thought that this was a brilliant concept given what we have discussed and learned in this class. we have learned that women have preferences which will lead more to investment in their child's human capital investment. Especially as it pertains to nutrition. I was thinking of how in the India paper, we talked about how female policy makers identified clean water as one of their primary concerns. I wonder if thoughts like this, and what these mothers might invest their money in, would lead directly to the reduction of health ailments in their children, which as we have discussed, is sometimes a limiting factor in educational and labor force attainment.
Posted by: Andrew Frailer | 10/29/2020 at 05:04 PM
I had never heard of the concept of conditional cash transfers (CCTs) until reading this article. I think it is a brilliant idea in that families and individuals are rewarded for good merits such as consistently attending school and having a strong academic performance. I also think the idea of planning to alleviate current poverty while also having the effect of reducing poverty in the next generation is ingenious. It seems intuitive that, on average, the families who receive CCTs will perform significantly better in terms of earnings and educational attainment. With that being said, it is unfortunate that there are no long term studies yet simply because not enough data is available. It is remarkable how CCTs have only been aroudn since the 90s--it seems like such a concept would have been around for a longer time.
One concern I have about CCTs is that we could see a essentially no effect from them if a poor household was hit by a catastrophe such as the breadwinner of a household losing his/her job, a natural disaster, etc. Such an effect could greatly diminish the effects of CCTs and ultimately cause for a large decrease in lifetime earnings for families / individuals that receive such grants.
Posted by: Mason Shuffler | 10/29/2020 at 05:22 PM
In this class as well as some of my other classes we have often discussed how poverty is a cycle, and that it often impacts generation as it can be very hard to escape from. This is often due to the fact that budget constraints of parents limit their capability to supply inputs to human captial such as good health, nutrition, and education to their children. According to this paper CCT programs such as Progresa are the perfect way to not only improve the lives of individuals at the present moment, but also to break intergenerational cycles of poverty. This paper provides sufficient evidence that CCTs have intergenerational benefits that are as large or larger than current poverty effects. The study did this through showing that after the implementation of Progresa there were large effects on the subsequent generation’s educational attainment, work, earnings, and household economic status. It found that these gains were particularly high for women, which is especially important given other studies that suggest that investments in women’s education have substantially large spillover benefits. Furthermore, gains in education and earnings for women is also an important aspect to increase the agency of women and thus makes CCT programs even more important. In this paper it was fascinating to analyze the relationship between our current topic of human capital and the past topic of gender.
Additionally, something I wonder about is how important are incentives. CCTs reward families who meet certain criteria. Essentially, welfare programs are conditional upon the receiver’s actions. I wonder if it is necessary to make them conditional upon certain behaviors in order to see the benefits observed in this paper or if other welfare programs that aren’t conditional would still cause similar benefits.
Posted by: Sydney Goldstein | 10/29/2020 at 06:51 PM
Parker and Vogl's paper provides us with a brilliant example of a program that invests in human capital and displays tangible outcomes that alleviate poverty in third world countries. It was highly interesting to see the theories we learned in class put to practice and encouraging to know that these policies are effective and even intergenerational. This paper builds off of previous research done with cash transfer programs to see if they have long term effects, which they do. This makes sense, as parents would try to "pass on" their values and prioritization of education to their children and would now have the means to expose their children to such opportunities. This suggests that similar policies and programs would create a wave effect that provides future generations with opportunities to better their lives through higher education, better income, more participation in the labor force, higher social status, etc. What I found most interesting in this paper is that the CCTs had a more noticeable positive effect on women than men, which connects to previous papers we read and the discussions we had in class. More women were able to participate in the labor force, and as we learned in previous classes, this has a plethora of positive effects (and spillover effects) as women start making their own income and become more financially and socially independent. I am highly curious as to how the cash transfer programs worked out in countries other than Mexico, such as those in Asia and Africa, and if the shift from agricultural to non-agricultural sectors is a universal effect (I am sure it is, but I am specifically curious about the shift in countries with economies that highly depend on agriculture).
Posted by: YoungJae | 10/29/2020 at 06:57 PM
This study illustrates the highly significant role that conditional cash transfers play in increasing educational attainment for young people in Mexico. Childhood exposure to Progresa raised the probability of completing high school by 10-15 percentage points for both sexes. Further, “the secondary and high school impacts range from 40 to 70 percent of baseline rates” (21). When turning to the long-run impacts of Progresa, the study indicated that increases in education may translate to improved outcomes in the labor market, but noted the endogeneity of such results (21).
In my opinion, the most interesting aspect of these results was how it related to advancements specifically for women. In both areas, Progresa has led to “striking growth” for young adult women. While male education has increased by similar amounts, Progresa’s impact on male labor supply and sectoral affiliation has been more modest compared to its impact on women. Further, “estimated effects on labor income are positive for both sexes but statistically significant only for women” (23). These findings relate directly back to our class discussion in previous weeks on the significantly influential impacts of increased educational attainment for women. They indicate that women empowerment in a developing economy has greater returns of investment than males. This leads not only to improvements in the economy, but also to intrinsic benefits for women that live in systemically inferior positions.
All in all, while this study expands the conversation of conditional cash transfers by bringing in the facet of intergenerational benefits, I am left wondering what effects programs like Progresa have in other countries around the world. Progresa has taken off since the late 1990s, and currently covers one quarter of all families in Mexico. About two thirds of these families derive from rural communities. In countries with a larger urban poor, how do the impacts of conditional cash transfers differ there? Are the effects more or less significant? Further, what are their effects where they are used in countries that are already much more developed, like the US? Therefore, while this study is an effective case study that broadens the timeline of the conversation, I would be interested to hear more on the geographically diverse impacts of conditional cash transfers.
Posted by: Julia Foxen | 10/29/2020 at 07:00 PM
The last paragraph of this paper caught my attention. The authors write that for conditional transfers to be preferable to unconditional transfers, they must improve the lives of children. They state that “short-run benefits like increases in school enrollment do not on their own meet this standard, unless one views enrollment as having intrinsic rather than instrumental value.” For this reason, they write, their evidence of long run benefits is necessary, though not sufficient. I do agree that evidence of long-run benefits has significant implications for CCT programs and policymakers. However, I disagree with their implication about the (lack of) intrinsic value of enrollment. The use of the word ‘unless’ in the statement above implies that there may not be intrinsic value in school enrollment. I would argue that there is intrinsic value in children’s school enrollment, and that we cannot lose sight of this when we talk about and try to measure the instrumental value of education. In thinking about Sen’s work and our discussions of freedoms and capabilities, I believe that children have a right to education. To deny them education is an unfreedom; the ability or freedom to go to school therefore has intrinsic value. And since children’s school attendance is almost entirely dictated by their parents, it seems to me that we ought to do everything we can to incentivize parents to enroll their children in school and eliminate this unfreedom that so many children face. Because I believe that there is intrinsic value in the freedom or opportunity children have to attend school, and because CCT programs provide incentives for parents to send their children to school and have been shown to increase enrollment, I think the merit of such programs shouldn’t be judged only by examining the instrumental value of education.
Posted by: Sarah Hollen | 10/29/2020 at 07:17 PM
I found Parker and Vogl’s work on conditional cash transfers interesting as well as supportive of topics we have previously discussed in class. I enjoyed seeing data points which support the hypothesis that targeting specific groups can see larger impacts on human capital. First, there is substantial evidence that Mexico’s Progresa program has provided opportunities for young women. Not only through greater labor force participation but also through opportunities for migration. Second, Progresa is focused on low-income regions of Mexico and shows large returns for these groups, further supporting our discussion of how targeting populations of lower economic status can lead to greater returns from human capital investment. Finally, the study is founded on the understanding that returns from human capital investment are largest for children who have yet to make the transition from primary to secondary school. We had previously discussed how all three of these population groups would most largely benefit from poverty programming, and this paper presents concrete support for long-term gains of conditional cash transfers.
Prior to reading this paper, I was unfamiliar with the Progresa program. However, as discussed above, I was happy to find that the program seemed well reasoned in its approach towards building human capital in vulnerable populations. Of particular note, I found it interesting that the cash transfers were provided to the mother of the child in order to hopefully ensure the greatest amount of spending on the child as possible. A question that constantly comes up throughout the paper is the comparison between conditional and unconditional programs. I am interested to learn more about the differences in results for these two types of programs. I think that conditional cash transfers make logical sense as they help to ensure that money is spent in a productive way. However, as we have discussed in class, low-income households act in rational ways in order to improve their livelihood and it seems that conditional programs could exclude certain highly vulnerable households by casting the net too narrowly. A combination of both programs seems sensible as completely cutting funding for low-income households after the child fails a grade more than once seems unreasonable since there could be exogenous factors preventing that child’s success. Until I learn more about the differences and researchers investigate more long term outcomes, I can only provide my initial reactions.
Posted by: John Lavette | 10/29/2020 at 07:50 PM
Conditional Cash Transfers contribute to our recent class discussions about investments in human capital. CCTs incentivize low income families to invest in their children's education. The changes in the educational attainment have to the potential to then change the labor market structure of a country. I agree with the paper that these CCT programs like Progresa are great ways to invest in low income families and help poverty issues. I also found it interesting that these programs seem to work in both developing and already developed countries. In past classes we have warned against trying to find "one-size fits all" solutions to problems. In this case it seems that the Conditional Cash Transfers are very versatile in the environments in which they work.
One quote that caused me to pause was "program rules allow students to fail each grade once, but if a student repeats a grade twice, the schooling benefits are discontinued permanently". I think this is a bit harsh, and like Mason mentioned, what if a family experienced a tragedy or a natural disaster and their circumstances changed drastically. The situation could be resolved in a few years, but what if in that time a child happened to fail a grade twice? The family's benefits for this child would be gone forever for something that was beyond their control. Although, this rule keeps families from taking advantage of the CCT system I think that it has the possibility to exclude families that actually want to benefit from the program.
CCTs also show how investments in human capital have multigenerational impacts. I think that is more incentive for parents to participate in these programs, knowing that the effects their investments will last instead of potentially being temporary. Its interesting how to CCT has differing impacts among gender. In my blog last week, I noted that the gap in returns for educational investment between girls and boys is increasing. I think this relates to how the positive effects of CCTs are greater in females than in males.
Posted by: Frances McIntosh | 10/29/2020 at 07:52 PM
I found it particularly refreshing to read about an actual program that we have long term data for, and therefore, actual results. In a lot of ways, the concept of conditional cash transfers seems simple: give people the incentive to do things that will benefit them, their children, and society/the economy. However, as we have talked about in class, many people have the (wrong) belief that people are poor because they are lazy or dumb. The reality is the lack of opportunity and the inability to invest in themselves.
The most important result to me is the increase in labor market participation by women. The increase can be attributed nearly in full to "increases in paid work." This, of course, seems like it should be obvious that money talks, but so many women were not participating in the labor market because they weren't able to earn enough to be worthwhile to them. Meanwhile, there is little impact on participation or wage for men, which only show how large the discrepancy was to begin with. Overall, the program serves as a great jumping off point for similar programs to mimic and improve upon. From a policy perspective, the results are clear and should promote more spending.
Posted by: Emma | 10/29/2020 at 07:53 PM
I think the most crucial point to note about CCTs is that their goal is to not only alleviate poverty in the short term, but to also reduce poverty in future generations. This study clearly illustrates the beginnings of this second goal, since enough time has passed after Progresa was created to see longer-term effects such as on labor market outcomes. However, I would imagine CCTs will have even more extensive effects that researchers will not be able to ascertain until much more time has passed. Simply based on the human capital theory, an initial investment in a child’s education will increase their own lifetime earnings potential. However, the higher levels of both education and income will lead them to invest more in their own children, regardless of whether or they receive a cash transfer. If this is true, then just one round of CCTs would be effective in reducing poverty several generations down the line. Of course, this is impossible to measure empirically since Progresa was not created until 1997.
I’m also interested in the differential impact on men versus women with regards to labor market participation, especially since the increase in education was very similar for both genders. I don’t recall reading an explanation as to why this occurred, but I would hypothesize that this is because men are probably expected to enter the labor market regardless of the level of education that they receive. Women, on the other hand, are likely encouraged or forced to participate in household production, and thus the additional education allows them to more easily transition to the labor market, possibly because of increased intra-household bargaining power. Whatever the reason, the added benefit for women represents another success for Progresa in achieving economic development.
Posted by: Danny Lynch | 10/29/2020 at 08:26 PM
The two things that stood out the most to me about this look into CCT was that the Mexican program gave the money to the mother of the household and they're hint at future discussion of whether conditional cash transfers are more/less effective than unconditional cash transfers. As some of my peers have said in their posts, as well as discussions we have had in class, when the maternal powers are given control of the household finances, historically the result is higher levels of education and healthier diets. I think this is an important facet of the CCT program because it helps to ensure that the additional income with go towards the intended causes. If the income were spent on other, insignificant goods with lower levels of return or even goods and services with relative short run return, we may not seem the same levels of significant long term positive outcomes. As for the debate between cash transfers being conditional versus unconditional, I think my gut reaction is conditional makes more sense because giving families additional income, while important, may not result in the same levels of education attained for the children. I do see the argument that higher levels of income will result in higher levels of education and future income, but I think there could be a significant difference between those results if the child was still ensured to attend school. I would be interested to hear more about the difference.
Posted by: Hayden Ludt | 10/29/2020 at 09:15 PM
I found this to be a very interesting read. Conditional cash transfers can be very effective incentives in encouraging certain behaviors, especially amongst those most strapped for cash. I enjoyed reading about the Progresa program, as I'd only really read about the Bolsa Familia program in Brazil prior to this article. It was interesting to see similarities and differences in how the two Latin American countries constructed these programs.
I enjoyed how, like the class example about the grandmother receiving the money, the mother's of the households did here. I'm curious about the extent to which this impacted the women labor participation numbers cited in the article, would that number be lower if it went to men? It is always something that I find to be interesting, a decision that's unconventional but has strong support from research. The results of the Progressa program also showed how investments in human capital lead to different outcomes across generations, continuing to pay dividends beyond just the initial investment.
I'm also curious to see the cons of doing these conditional programs over unconditional ones. I personally gravitate towards the former due to the incentives it provides, but it does exclude people from aid who are in environments where it is more difficult for them to meet the standards set. I'm curious as to factors that could prevent people from earning conditional aid. I'm also curious about the expenses associated with ensuring people meet the conditions. Sometimes these can not be economical, ie drug testing as a condition for welfare aid in the US.
Posted by: Matthew Todd | 10/29/2020 at 09:46 PM
¡¡México!! Reading about my country was interesting because it has faced many economic struggles but the Progresa program actually seemed to be efficient (yay).
Given that studies have shown conditional cash transfer’s positive impacts on youth’s education, labor market outcomes, housing, geographic mobility, and asset ownership, I’d be interested to dive more into what obstacles are holding governments back from fulfilling this need. I can expect citizen pushback, especially from people in the upper class who don’t personally benefit from it. Nonetheless, the most vulnerable populations- poor children, girls/women, etc- benefit greatly from it and the empowerment of disenfranchised communities leads to economic development, as we’ve discussed thoroughly in class. The country’s growth would holistically benefit countries given that investment in education has many spillover effects. Therefore, it makes sense for them to implement a CCT program. The anti-poverty efforts with early intervention have long term returns to investment and could clearly pave the way for a more advanced economy, yet other countries are lagging in their efforts to bridge the gap in educational attainment, particularly for low-income households who could use financial incentives to be encouraged to keep their kids in school.
One thing I found interesting was that this initiative also benefits developed countries, including the United States, as opposed to just developing countries. I doubt that we would actually see that happen within the next few years (especially if next week’s election goes south), but it’d be worth giving a try and analyzing similarities and differences between countries who have successfully executed this program and the United States’ attempt at doing so. People from developing countries wouldn’t rely as heavily on migration for social mobility and a more stable lifestyle in general. The addition to human capital obviously benefits migrants’ destination countries, and I think we would still see that, but I am assuming to a lesser extent. Overall, I am glad the country decided to implement this and there's research to prove its efficiency, so I hope other countries can follow the lead.
Posted by: Jackie Tamez | 10/29/2020 at 10:53 PM
I really enjoyed reading about the Progresa program. Clearly, conditional cash transfers provide excellent incentives to keep children in school, which unsurprisingly has led to significant long-term effects on labor force participation, wages, and even consumption. Matt and I were talking about our final paper earlier today and discussed (as he mentions above) the paper we read about giving welfare to a female member of the household versus giving it to the male member of the household, and how it was distributed more efficiently. I wonder how this was done with the Progresa program; clearly, there are stronger returns for women than men here: would they be stronger if the money was given directly to the woman? Though this research shows that agency was provided to these women through increased labor force participation and migration ability, perhaps that would be yet another way to increase autonomy.
I'm also curious about the benefit of unconditional cash transfers; how beneficial are they as compared to conditional cash transfers? We talk a lot in the Shepherd program about providing autonomy to those experiencing poverty, and I'm wondering how that money would be allocated differently if it were given unconditionally. Do we have a moral responsibility to provide families with that autonomy, or is it better to regulate certain aspects of these cash transfers?
Posted by: Joey Dickinson | 10/30/2020 at 01:56 AM
“Do Conditional Cash Transfers Improve Economic Outcomes in the Next Generation? Evidence from Mexico" by Susan W. Parker and Tom Vogol draw from Esther Duflo’s research contributions that suggest school construction programs in poor and rural areas provide large long-run benefits and attempt to see if Progresa could do so in Mexico. Fortunately, aligning with previous discussions we have had investments in human capital especially education prior to the age of twelve do, indeed, have a tangible impact on economic productivity and Parker and Vogol even assert that CCTs have intergenerational effects on the nation’s productivity. The author’s were sure to include, “While education is likely to be an important mechanism, we do not attempt to distinguish it from other potential mechanisms, such as greater parental income during childhood.” acknowledging the multitude of potential confounding factors that prevent families from sending their kids to school in the first place. A final piece of the work that especially caught my eye was the magnitude of benefits of involving women in the process of CCT. First, Progresa was sure to let mothers become the direct recipients of this inflow. Table1 displays that at grades seven and above, the grants are higher for girls than boys to account for a historic disparity showing higher dropout rates among girls than among boys after primary school. Luckily this decision paid off immensely Parker and Vogol mention, “for women, childhood program exposure increases labor market participation 7-11 percentage points,” documenting the returns on investment in mobilizing a previously neglected demographic.
Posted by: abrahamr22 | 10/30/2020 at 09:09 AM
Parker & Vogls' paper on the long-term impact of Mexico's conditional cash transfer program reminds me of my own experience with need-based financial aid. Although, the severity of poverty experienced between me and the observations in the study are different and my financial aid is not conditional, the idea of human capital investment remains consistent. In the absence of aid, I would not have obtained the education I did at W&L and would have probably been enrolled in a community college. Although I would have still had access to some higher education, my returns in the future would probably not have been as high without a W&L education. I would have probably remained at the same social and economic status as my parents and pass down the same structural obstacles I faced as a low-income student onto my children. In the case of Progresa, the paper shows evidence that children whose families were receiving these conditional cash transfers experienced long-term economic and social mobility. This finding suggests that in the absence of the program, they would not have experienced the positive effects that equated or superseded poverty effects on their economic and social development.
Just as the government is providing a human capital investment on me to increase my future productivity, Progresa seeks to invest in a poor cohort whose potential productivity may be suppressed by poverty effects. Therefore, Progresa does not only care about present poverty, but it also cares about maximizing future returns by investing in untapped production. This makes me wonder how much intellectual and financial output we have lost due to our reluctance to enhance the economic and social well-being of those in poverty.
Posted by: Stelifanie | 10/30/2020 at 10:21 AM
It is very interesting to consider how vast and dramatic the effects are of effective anti-poverty policies, especially so in lower-income countries such as Mexico. In this case, CCTs have been shown to dramatically improve educational attainment as well as labor market outcomes for children who received these benefits before their transition from primary to secondary school. The researchers further explained that these benefits were not observed for individuals who were at least 15, or who had surpassed the time period of transition from primary to secondary school.
I think that this paper has helped to further some strong assumptions in my mind at this point after learning as much as we have about development and anti-poverty policies. Firstly, well-targeted anti-poverty measures can have dramatic positive effects when targeted to the least affluent families. This is true in this example as Mexico itself is a less-wealthy nation than developed nations in its proximity, such as the United States and Canada. Furthermore, the CCTs that the Mexican government implemented were largely experienced by individuals in the poorest areas of the country, with the majority of the recipients being rural families. Even a nation such as Mexico, which I don't know much about but could assume that their government budget is not as vast and flexible as that of the United States for instance, is able to benefit greatly by re-allocating some money to their poorest families, where benefits will be seen most greatly.
A second major assumption is that the greatest benefits will be experienced by individuals who are still children at the time of receiving the benefit. The younger the child is, the more they could be impacted by improvements in wealth, allowing for greater rates of educational attainment and long-run labor market outcomes as described in this paper. I think this is true across the board - early childhood education and monetary improvements can prove to be the most beneficial to improve the economic situations of families and bring families and individuals out of abject poverty. I think these two assumptions prove to be very useful in thinking about effective anti-poverty measures both in developed and less-developed nations.
Posted by: Eric Schleicher | 10/30/2020 at 10:44 AM