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The Impact Evaluation of the PROGRESA/Oportunidades program of Mexico

The Impact Evaluation of the PROGRESA/Oportunidades program of Mexico

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The Impact Evaluation of the PROGRESA/Oportunidades program of Mexico

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  1. The Impact Evaluation of the PROGRESA/Oportunidades program of Mexico Emmanuel Skoufias The World Bank PRMPR April 2007

  2. Why are CCT programs attractive?-1 • CCT can provide the foundation of a comprehensive Poverty Alleviation and Social Protection Policy • Induce investments by poor on human capital • Can mitigate short-run macroeconomic shocks • Can facilitate the phase-out of price subsidies and/or other less effective programs • Can serve as a basic social safety net system available to ALL households (complementary to the safety net system accessible through employment in formal sector)

  3. Why are CCT programs attractive?-2 • CCT can achieve a significant redistribution of income in favor of the poor under tight fiscal conditions • Oportunidades was initiated in the context of a short-run economic crisis (1994-95) and was designed as medium-term response to the crisis • Oportunidades gradually replaced generalized food subsidies with direct monetary transfers

  4. Why are CCT programs attractive? -3 • CCT exploit the complementarities among health, education, and nutrition. • Coordination: Promote coordination of poverty alleviation efforts among Gov’t ministries (education, health, nutrition) • Synergy: simultaneous provision of health, education and nutrition benefits to all the beneficiaries.

  5. Why are CCT programs attractive?-4 • Co-responsibility: The beneficiaries need to take specific actions or else they do not receive benefit • CCT have potential of leading to lasting improvements in the well being of the poor • Evidence from rigorous impact evaluation of Oportunidades in Mexico Familias en Accion in Colombias and other countries

  6. Dual Objectives of CCT • Long-run poverty alleviation through investment in human capital (i.e., education, health and nutrition) • Early Interventions have much higher returns over life-cycle • Short-run effect on poverty through cash transfers

  7. How CCT try to achieve their objectives?-1 • Targeting (geographic/household-level) • Oportunidades combines geographic/village-level with household level targeting within villages • Simultaneous intervention in 3 key sectors (synergy)

  8. How CCT try to achieve their objectives?-2 • Conditioning cash transfers to regular school attendance and visits to health centers • Cash transfers given to mothers • Parallel support on Supply Side (schools & health centers)

  9. Controversial aspects of Oportunidades-1 • Why grant direct monetary transfers instead of food in-kind, vouchers, or improving supply side of services. Distribution of large volumes of food free of charge can inhibit the development of private commercial channels and create unfair competition with marginal producers in the area • Why target on the extreme/structurally poor and not include all? • Setting new selection criteria: Why not than start from beneficiary lists of existing programs or obtaining the roster of beneficiaries from community proposals

  10. Controversial aspects of Oportunidades-2 • Creating a single national roster of beneficiaries • Giving transfers directly to individuals rather than to communities • Having unique, non-discretionary rules for the whole country rather than allowing flexibility for local initiatives and conditions in each state

  11. Controversial aspects of Oportunidades-3 • Granting benefits to women, given potential family conflicts • Having possible impact on fertility (since benefits are linked to family demographics) • Size of cash transfer • the definition of family co-responsibilities and their certification (might generate additional workload for teachers and medical personnel)

  12. How the controversial aspects of Oportunidades were managed • Piloting • Expansion of the program in phases • Independent and rigorous evaluation (targeting, impact of the program on health, education, nutrition, social relations, women’s status etc.) • Monitoring • Operational evaluation of the program • Cost analysis

  13. Why Evaluation? • Economic Reasons • Improve design and effectiveness of the program • Comparing program impacts allows G to reallocate funds from less to more effective programs and thus to an increase in Social Welfare • Social Reasons (increases transparency & accountability) • Political Reasons • Credibility/break with “bad” practices of past

  14. CCT programs (like Oportunidades) Expanding • Brazil: Bolsa Familia=Bolsa Escola, Bolsa Alimentacao & Programa de Erradicaçao do Trabalho Infantil (PETI) • Colombia: Familias en Acción • Honduras: Programa de Asignación Familiar (PRAF) • Jamaica: Program of Advancement through Health and Education (PATH) • Nicaragua: Red de Protección Social (RPS) • Turkey • Ecuador: Bono Solidario • Argentina: • Bangladesh: Food for Education

  15. OPORTUNIDADES (previously called PROGRESA) • Large program covering rural and marginal urban areas • In 2004: 5 million families or 25 million individuals • In 2004: budget of US$ 2.5 billion or 0.3% of GDP

  16. Program Description & Benefits • Education component • A system of educational grants (details below) • Monetary support or the acquisition of school materials/supplies (The above benefits are tied to enrollment and regular (85%) school attendance) • Improved schools and quality of educations (teacher salaries)

  17. Program Description & Benefits • Health and Nutrition Component • basic package of primary heath-care services • Food support (cash) • nutritional supplements: 6 packs/child/mo; 20% of caloric requirements and 100% of necessary micronutrients) (The above benefits are tied to regular visits to health-service centers). • Information and training • Improved supply and quality of health services (medicine availability etc.)

  18. Program Description & Benefits • Average benefit received by beneficiary households: or 20% of the value of consumption expenditure before program • About half transfer is the cash transfer for food and the rest from the school-related cash transfer

  19. PROGRESA/OPORTUNIDADES: Evaluation Design • EXPERIMENTAL DESIGN: Program randomized at the locality level (Pipeline experimental design) • IFPRI not present at time of selection of T and C localities • Report examined differences between T and C for more than 650 variables at the locality level (comparison of locality means) and at the household level (comparison of household means) • Sample of 506 localities – 186 control (no program) – 320 treatment (receive program) • 24, 077 Households (hh) • 78% beneficiaries • Differences between eligible hh and actual beneficiaries receiving benefits • Densification (initially 52% of hh classified as eligible)

  20. Targeting • Step 1: geographical targeting • Identify localities of highest marginality • Step 2: Household-level targeting • Within the localities identified in step 1, conduct a household census and use that census to collect socio-demographic data and information on housing characteristics that is consistent and standard nationwide. • Use discriminant analysis on census data to classify household as poor or nonpoor

  21. Table: A Decomposition of the Sample of All Households in Treatment and Control Villages

  22. Treatment E (Y) 2DIF impact estimate Control Before After

  23. Using regressions to get 2DIF estimates: Limit sample to eligible households in treatment and control and run regression: • Y(i,t) denotes the value of the outcome indicator in household (or individual) i in period t, • alpha, beta and theta are fixed parameters to be estimated, • T(i) is an binary variable taking the value of 1 if the household belongs in a treatment community and 0 otherwise (i.e., for control communities), • R2 is a binary variable equal to 1 for the second round of the panel (or the round after the initiation of the program) and equal to 0 for the first round (the round before the initiation of the program), • X is a vector of household (and possibly village) characteristics; • last term is an error term summarizing the influence random disturbances.

  24. Evaluation Tools Formal surveys (Semi)-structured observations and interviews Focus groups with stakeholders (beneficiaries, local leaders, local PROGRESA officials, doctors, nurses, school teachers, promotoras)

  25. PROGRESA Evaluation Surveys/Data

  26. PROGRESA Evaluation Surveys Additional Info Sources School & clinic survey School and clinic administrative data Nutrition survey conducted independently by Min. of Health and INSP Student achievement test scores by Min of Education Record of payments distributed to beneficiary households

  27. Topics of PROGRESA’s Evaluation Targeting accuracy and impact on poverty School enrollment, attendance, child labor, achievement scores Health and utilization of health facilities Child Nutrition Household Consumption & Nutrition

  28. Topics of PROGRESA’s Evaluation cont’d Operation of the program and perceptions of stakeholders Cost-Analysis and Cost Effectiveness Status of women, community relations Adult labor supply, leisure Impact on short-run poverty intrahousehold transfers

  29. Conditional Cash Transfers, Adult Work Incentives, and Poverty Emmanuel Skoufias The World Bank Vincenzo di Maro University College London November 3, 2006 LACEA meetings Mexico City

  30. Introduction-1 • Means-tested CCT programs increasingly popular • Their success at reducing current poverty depends on whether, and the extent to which, cash transfers reduce adult work incentives. • In a CCT a cash transfer can be considered as having offsetting income and substitution effects. • Income effect: The cash transfer increases household income which in turn increases both Consumption and Leisure (decreases adult labor supply). • Substitution effects: associated with meeting the conditionalities of the program. Direct and indirect time costs that depend on the substitution possibilities in the time of family members used in household production.

  31. Introduction-2 • Thus, the response of adult labor supply to CCTs can only be determined empirically. • Most welfare programs in the US, have explicit disincentives to work. • In most CCT programs the level of benefits received is not affected by the work decisions of hh members or the income level of the hh (once the hh is determined as eligible for the program). • However, there are other sources of negative incentives on adult labor supply for both eligible and non-eligible households. • Eligible hh may work/earn less so as not to get an income level above the poverty threshold used by the program. • Non-eligible hh may work/earn less so as to qualify for the program

  32. Introduction-3 • Empirical evidence on how labor supply responds to transfers is scarce. Sahn & Alderman (1996): the labor supply effect of a rice subsidy in Sri Lanka is significantly large.

  33. Objectives-1 Use data from the PROGRESA 1997-99 evaluation sample to investigate: • whether eligibility for program affect adult labor force participation (in the treatment villages) • whether the presence of the program affects the labor force participation of adults from non-eligible households (in the treatment villages) • The effect of eligibility on adult leisure time • The impact of the program on poverty measures based on household income.

  34. Participation in Labor Force where Leisure (from time allocation survey in June 1999:

  35. Table 1: Impact (2DIF estimates) on the probability of working among eligible (E=1) adults

  36. Table 2: Impact (2DIF estimates) on the probability of working among NON-Eligible (E=0) adults

  37. Tables 1 & 2 results 2DIF (1): • PROGRESA has no significant impact on the labor force participation of adult males and/or females • There are no significant/lasting impacts on the allocation of time between salaried and self-employment activities, • though the program appears to be associated with a negative, albeit non-significant, effect on self-employment among males

  38. Tables 1 & 2 results 2DIF (2): • The presence of PROGRESA has no significant impact on the labor force participation of adult males and/or females from noneligible households (in the treatment villages)

  39. Table 3: Impact (CSDIF estimates) on Leisure of Eligible (E=1) adults

  40. Table 3 CSDIF (1): • PROGRESA has no significant impact on the leisure time of adult males and/or females

  41. Impact of PROGRESA on Poverty (1): • Results so far: program has no adverse effects on labor income • Effects on total hh income and thus poverty depends on the direct and indirect costs associated with participation in PROGRESA. • Participation in PROGRESA • (a) income losses form children’s work • (b) give up benefits from other programs (DIF, Ninos de Solidaridad, Abasto Social de Leche) in additional to the elimination of the Tortilla subsidy

  42. Impact of PROGRESA on Poverty (2): • Figures 1 & 2: the effects of PROGRESA on hh income and poverty may not be adequately summarized by the size and incidence of the cash transfers • Econometric analysis based on individual and hh income in each round from a variety of sources: labor income, income from self-employment, other income (pensions, rent, and community profits) and government transfers (Ninos de Solidaridad, ININ, PROBECAT, PET, PROCAMPO) +PROGRESA Cash Transfers (from program admin records)

  43. Figure 1 – Mean household income from children Among beneficiary households with children aged 8-17 Panel a Mean household TOTAL income from Children (excluding PROGRESA cash transfer)

  44. Figure 1 – Mean household income from children Among beneficiary households with children aged 8-17 Panel b Mean household LABOR income from Children