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                  enGender Impact: The World Bank’s Gender Impact Evaluation Database



                   Investing Cash Transfers to Raise Long Term Living Standards

      Author(s)            Paul Gertler, Sebastian Martinez, Marta Rubio-Codina
      Contact              gertler@haas.berkeley.edu

      Country              Mexico

  Organizing Theme         Economic Opportunities and Access to Assets

       Status              Completed

Intervention Category      Cash Transfer

       Sector              Social Protection
                           Using data from a randomized experiment, we find that poor rural Mexican households
                           invested part of their cash transfers from the Oportunidades program in productive assets,
                           increasing agricultural income by almost 10 percent after 18 months of benefits. We
                           estimate that for each peso transferred, households consume 74 cents and invest the rest,
      Abstract
                           permanently increasing long-term consumption by about 1.6 cents. Results suggest that
                           cash transfers can achieve long-term increases in consumption through investment in
                           productive activities, thereby permitting beneficiary households to attain higher living
                           standards that are sustained even after transitioning off the program.
 Gender Connection         Gender Focused Intervention

  Gender Outcomes          Investment, consumption

     IE Design             Clustered Randomized Control Trial (Clustered at village level)
                           The program provides cash transfers to parents to invest in human capital of their children.
                           The rural Oportunidades program operates in small credit constrained communities.
                           Households are eligible if they score below a cutoff on a proxy means test. Transfers are
    Intervention           given to the female head of household and are conditional on children's school attendance,
                           use of preventative medical care and attendance at health related talks. The intervention is
                           comprise of two types of transfers, a 90 pesos per month transfer, and a transfer ranging
                           on 60-225 pesos for children school enrollment for students younger than 18 years old.
                           The study measures 18 months of exposure to the program. Households receive benefits
 Intervention Period
                           for a three year period. Cash benefits are received monthly.
                           The evaluation includes all households in 506 rural communities in 7 states. 320
                           communities were randomly assigned the treatment and 186 communities served as the
  Sample population
                           control. The treatment includes 7,658 eligible households and the control group includes
                           4,644 households that were offered the transfer 18 months later.
Comparison conditions      The control group received the program 18 months after the treatment group

   Unit of analysis        Household Level

  Evaluation Period        March 1998-November 2000


   Last updated: 14 August 2013                                                                      1
                   enGender Impact: The World Bank’s Gender Impact Evaluation Database


                            The paper investigates whether cash transfer programs increase investment in productive
                            assets. The study finds that beneficiary households increase ownership of productive farm
                            assets significantly faster than non-beneficiary households. Even four years after the
                            program, the treatment group were 5.6% higher than the control group. The authors
        Results             estimate that for each dollar transferred, beneficiary households consume 76 cents and
                            invest the rest, leading to an increase of 1.6 cent of long-term consumption for each peso
                            received. After 9 years, it is estimated that a typical household will have an increase in
                            income of 53.9 pesos per month, a substantial amount relative to the 159.8 pesos per
                            month baseline per capita consumption.
                            One concern is that current and cumulative transfer amounts are determined in part by
                            whether children attend school. If a household sends their children to work instead of
Primary study limitations   going to school, then the family would have lower transfers but higher income from the
                            child's work, potentially biasing the results. As a result, the authors instrument current and
                            past transfers with maximum possible transfers.
    Funding Source
                            Gertler, P. J., Martinez, S. W., & Rubio-Codina, M. (2012). Investing cash transfers to raise
      Reference(s)          long-term living standards. American Economic Journal: Applied Economics, 4(1), 164-
                            192.
    Link to Studies
                            http://www.ingentaconnect.com/content/aea/aejae/2012/00000004/00000001/art00007
       Microdata




    Last updated: 14 August 2013                                                                         2