Panel Paper: Improving Conditional Cash Transfers Effect: The Role of Neighborhoods Conditions in Mexico

Thursday, July 19, 2018
Building 5, Sala Maestros Lower (ITAM)

*Names in bold indicate Presenter

Johabed G. Olvera, Indiana University and Maureen Pirog, University of Washington

A myriad of programs and policies intends to improve the conditions of disadvantaged population by improving educational outcomes of children, reducing crime or enhancing neighborhood conditions. One kind of social policy largely used to enhance poor families’ socioeconomic outcomes is conditional and unconditional cash transfers. Albeit the large amount of resources invested in this kind of policy, its impacts are rather poor. The Mexico’s conditional cash transfer (CCT) program is an example of this. Since 1997, the Federal government grants monetary cash transfers to poor families conditional on the children staying in school, through Oportunidades. However, 53.8% of children lived still live in poverty (Coneval, 2012). One factor that might be hindering Oportunidades’ positive impact is neighborhood conditions. An extensive literature has suggested that people's socioeconomic prospects are affected by neighborhood conditions (Small and Newman, 2001; Sampson et al., 2002). Given that in poor localities neighborhood conditions are precarious, one can argue that these circumstances change the behavior of parents and/or children to behave in a way that obstruct the effect of Oportunidades. This paper analyzes whether CCT impacts increase in the presence of improving neighborhood conditions programs. We test this using another social program called Habitat, which grants money to local governments to improve neighborhood conditions in poor localities. We use a panel dataset of localities covered by Oportunidades from 1997 to 2015. Exploiting variation across time and localities, we estimate the effect of the presence of Habitat on educational outcomes of localities covered by Oportunidades.