Do Conditional Cash Transfers Improve Economic Outcomes in the Next Generation? Evidence from Mexico∗

Conditional cash transfer programs have spread to over 80 countries in the past two decades, but little is known about their long-term effects on the youth they target. This paper estimates the impact of childhood exposure to the Mexican program Progresa on economic outcomes in early adulthood by leveraging the age structure of program benefits and geographic variation in early program penetration. Childhood exposure to Progresa improves educational attainment, geographic mobility, labor market outcomes, and household economic outcomes in early adulthood. Schooling impacts are similar for men and women, at roughly 1.5 years, while labor market impacts are more pronounced for women, amounting to 30-40% of mean labor force participation and 50% of mean labor income in pre-program cohorts. Indexes capturing household economic impacts increase on the order of 0.2 standard deviations. ∗We are grateful to seminar participants at CIDE, Princeton University, and University of Maryland for helpful comments. †University of Maryland and CIDE. ‡Princeton University, BREAD, and NBER.