Do Cash Transfers Increase Savings by the Poor? Evidence from Mexico's Progresa/Oportunidades Program
Cash transfer programs have increased in popularity as a mechanism to reduce present poverty by raising current incomes and investments in human capital of young children. Mexico was among the first to implement a large-scale conditional cash transfer; the Progresa/Oportunidades program, the explicit aim of which was to reduce the country’s widespread extreme poverty. The program’s demonstrated success ensured its continued existence as a pillar of Mexico’s poverty alleviation strategy. As such, it is important to study the long-term effects of this (and similar) programs on household savings. This study uses Progresa/Oportunidades program data to analyze the effect of the receiving cash transfers on household savings. By exploiting the randomization of the program’s rollout, I use OLS estimation to show that inclusion in the Progresa/Oportunidades program increases a households’ monthly savings by 20%. However, these results are not significant when household debt is accounted for. This highlights the need to include both savings and debt as part of cash transfer programs to enhance their effectiveness.
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CAN INCENTIVES INCREASE PREFERENCE FOR DAUGHTERS? EVIDENCE FROM A CASH TRANSFER SCHEME IN HARYANA, INDIA Mazumdar, Chandralekha Tulal (Georgetown University, 2012)The gender imbalance caused by a skewed female-to-male sex ratio remains a persistent problem in the Indian population despite rapid economic development in recent times. The low child sex ratio has resulted from both ...