PROGRESA and Its Impacts on the Welfare

programs aimed at developing the human capital of poor households. Its 1999 budget of about $777 million equaled 0.2 percent of Mexico’s gross domestic product (GDP). By the end of that year, PROGRESA covered approximately 2.6 million families in almost 50,000 localities in more than 2,000 municipalities.These beneficiaries comprised about 40 percent of all rural families, or oneninth of all Mexican families. PROGRESA represents a significant change in the Mexican government’s provision of social programs. In contrast to previous poverty alleviation programs, PROGRESA applies community and household targeting to ensure that program resources are directed to rural households in extreme poverty. Communities are first selected using an index based on census data that measures their economic marginality.Within the selected communities, households are chosen using socioeconomic data. PROGRESA focuses simultaneously on several dimensions of human capital. It intervenes in education, health, and nutrition in an integrated effort to decrease current and future poverty levels. Recognizing the potential of mothers to use resources effectively and efficiently in a manner that reflects the immediate needs of the family, PROGRESA gives benefits exclusively to mothers. Cash transfers and nutritional supplements are conditioned on children’s regular school attendance and visits to health care centers.The integrated nature of the program reflects a belief that addressing all dimensions of human capital simultaneously has greater social returns than their implementation in isolation. In early 1998, the International Food Policy Research Institute (IFPRI) was asked to assist the PROGRESA administration in determining if the program was “functioning in practice as it is intended to by design.” In PROGRESA and its Impacts on the Welfare of Rural Households in Mexico, Emmanuel Skoufias synthesizes the findings contained in a series of reports prepared by IFPRI for PROGRESA between 1998 and 2000. EVALUATING PROGRESA IFPRI’s evaluation of PROGRESA consisted of two critical elements. First, researchers adopted an experimental design in the early stage of the implementation of the program that enabled them to measure program impact by comparing the mean values of key outcome indicators among beneficiary households (the treatment group) with similar households that were not yet covered by the program (the comparison or control group). Second, researchers collected information from these two household groups before and after implementation of the program. The full sample used in IFPRI’s evaluation of PROGRESA consists of repeated observations (panel data) collected for 24,000 households from 506 localities in 7 Mexican states.These households were interviewed periodically between November 1997 and November 1999. Focus groups and workshops with beneficiaries, local leaders, PROGRESA officials, health clinic workers, and schoolteachers were also carried out. The majority of IFPRI’s findings suggest that PROGRESA’s combination of education, health, and nutrition interventions into one integrated package has had a significant positive impact on the welfare and human capital of poor rural families. The initial analysis of PROGRESA’s impact on education shows that the program has significantly increased the enrollment of boys and girls, particularly of girls, and above all at the secondary school level. Most of the increase in school attendance is attributable to children, especially boys, working less to earn money for their families.The results imply that children will have, on average, about 0.7 years of extra schooling because of PROGRESA.Taking into account that more schooling is associated with higher levels of income, the estimations imply that children will have 8 percent higher lifetime earnings due to the education benefits they have received through PROGRESA. As a result of PROGRESA, both children and adults are also experiencing improvements in health. Children receiving PROGRESA’s benefits have a 12 percent lower PROGRESA and Its Impacts on the Welfare of Rural Households in Mexico