In 1997, the Mexican government designed the conditional cash transfer program Progresa, which became the worldwide model of a new approach to social programs, simultaneously targeting human capital accumulation & poverty reduction

Maria Caridad Araujo, Karen Macours. Education, Income and Mobility: Experimental Impacts of Childhood Exposure to Progresa after 20 Years. 2021. ffhalshs-03364972. https://www.povertyactionlab.org/sites/default/files/research-paper/Education_Income_Mobility_2021.pdf

In 1997, the Mexican government designed the conditional cash transfer program Progresa, which became the worldwide model of a new approach to social programs, simultaneously targeting human capital accumulation and poverty reduction. A large literature has documented the short and medium-term impacts of the Mexican program and its successors in other countries. Using Progresa’s experimental evaluation design originally rolled out in 1997-2000, and a tracking survey conducted 20 years later, this paper studies the differential long-termimpacts of exposure to Progresa. We focus on two cohorts of children: i) those that during the period of differential exposure were in-utero or in the first years of life, and ii) those who during the period of differential exposure were transitioning from primary to secondary school. Results for the early childhood cohort, 18–20-year-old at endline, shows that differential exposure to Progresa during the early years led to positive impacts on educational attainment and labor income expectations. This constitutes unique long-term evidence on the returns of an at-scale intervention on investments in human capital during the first 1000 days of life. Results for the school cohort - in their early 30s at endline - show that the short-term impacts of differential exposure to Progresa on schooling were sustained in the long-run and manifested themselves in larger labor incomes, more geographical mobility including through international migration, and later family formation.

7. Conclusion

More than 20 years ago, Mexico was among the very first countries in the world to test an innovative model of social protection, with a redistributive, short-term goal of reducing poverty and inequality, while at the same time investing in the human capital of the next generation. It also was among the first countries to embrace evidence-based policy making building a large-scale and rigorous evaluation in the initial program design, which was instrumental to establish credible evidence of the short- and medium-term impacts of the program. These two innovations help explain why the Mexican conditional cash transfer model was later adopted by many other countries worldwide.

After more than 20 years of experience with conditional cash transfers, it is important to understand their longterm impacts. Did the short-term gains in human capital investments translate in sustainable improvements in education, labor market and life outcomes? This paper builds on the initial rigorous evaluation design of the first phase of Progresa in rural areas of seven central states of Mexico, to analyze whether experimental variation in exposure during critical ages in childhood led to long-term differential outcomes. Although such differential outcomes likely provide an underestimate of the total absolute effects, they can offer important proof-ofconcept regarding the existence of long-term effects of the program. Finding such differences, as we do in this paper, offers strong evidence that human capital investments facilitated by cash transfer programs are translated in improved outcomes in the beneficiaries’ lives 20 years later. The paper further highlights that understanding the long-term effects necessarily requires accounting for mobility of the beneficiaries, most of whom 20 years later have left their original households, often indeed moving far away from their villages.  Amongst individuals randomly assigned to Progresa in early childhood, having been exposed to Progresa 18 months earlier in life resulted in 0.4 years more schooling by the time they were 18-20 years old. Differential exposure to the program during early childhood led to an 8 percent increase in the likelihood of finishing secondary school, an 18 percent increase in that of finishing upper secondary school, and a 67 percent increase in obtaining university studies. Overall, earlier exposure led to a shift of the educational attainment distribution at all levels, with results being particularly strong for women. Additionally, and consistent with the educational outcomes, differential exposure to Progresa during early childhood increased expected labor income, especially for women. It also increased geographic mobility.

The cohort randomly exposed to the program when they were about to make the transition from primary to secondary school, rather than 18 months later, experienced an increase of 7 p.p. in the likelihood of finishing lower secondary school (9th grade) – with effects for women larger at 10 p.p. Earlier exposure translated into a 15 percent increase in annual labor income - 25 percent for women, and more geographic mobility. It increased the likelihood of international migration and of earning income abroad. Internal migration shifted towards small urban and semi-urban areas. Income gains are likely to come from beneficiaries’ ability to move to places with higher paying jobs, including in self-employment, because we found no significant changes in the probability of being economically active or in the type of occupation. These gains were concentrated on a subset of individuals, suggesting others did not overcome frictions in the labor market. Lastly, earlier exposure to the program delayed parenthood and household formation with about half a year (from a control mean of 21 years), but it did not change the probability of having children.

When evaluating the returns to education for Progresa beneficiaries, it is important to place their educational gains in the national context. Educational levels increased a lot in Mexico over this period, and for the same cohorts. Average schooling was higher at the national level than among individuals from the evaluation villages (consistent with the targeting of the program to marginal localities and poor households). Hence, any returns to education occur in a context where many others -with higher educational levels- were competing for jobs in the labor market. This is not unlike the situation of many other programs that increase schooling of poor children across the world, given the large gains in educational attainment in many low and middle-income countries. The higher income and shifts in trajectories may result not only from signaling or increased skills coming from more schooling but could also be explained by access to different networks and from attending school outside of the village which opened the path of geographic mobility. This too is likely to be relevant in many other low- and middle-income country settings.

In sum, this paper shows that conditional cash transfers in Mexico contributed to important gains in, and returns to human capital, both through exposure to the health and nutrition components very early in life, and through exposure to the educational component during the transition from primary to lower secondary school.  This finding is notable given that in 2019 the program was substantially transformed, eliminating the health and nutrition component of Prospera, and focusing grants on upper-secondary and tertiary education, while giving a more modest amount to families with children enrolled in preschool, primary or lower-secondary school.  More generally, the evidence in this paper is unique in showing experimental impacts at-scale 20 years after the start of nation-wide government program, and it does so for a social program that has been replicated across Latin America and many other parts of the world. These positive findings arguably re-emphasize the value of the initial innovations of the CCT approach, especially as the differential results are likely an underestimate of the total absolute effects. At the same time, the results reveal important heterogeneity in outcomes: while a subset of beneficiaries was able to use the opportunities provided by the program to substantially improve educational and labor market outcomes (including through international migration), others may have benefitted less. These results both confirm the fundamental strengths of the initial CCT approach, but also point to a need for complementary policies to allow more households to bear the full fruit of increased opportunities. Finally, the results on early childhood exposure not only highlight the returns to the nutrition and health components of the CCT, but more generally provide unique large-scale long-term evidence on the returns to investments in human capital in the early years of life.