SECTION: Economic Scene
May 2, 2002
More Information on PROGRESA
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The idea is simple: pay families to send children to school and visit health care providers. Careful evaluations suggest the strategy is working.
In 1997 Mexico initiated Progresa, long advocated by economists like Santiago Levy, Mexico's director general of Social Security. Families are sent a bimonthly check if their children regularly attend school in grades three through nine; the amount varies from about $10 a month in third grade to $35 for girls in ninth grade. Girls in secondary school are paid 15 percent more than boys because girls have a higher dropout rate.
Families are also given a grant to buy school supplies, and a monthly food subsidy if they get medical check-ups, immunizations and health education lectures. The money goes directly from the central government to the children's mothers.
The education grants are substantial, about two-thirds of what secondary students would receive for full-time work. In 2000, some 2.5 million rural families received benefits, about one-ninth of all families in Mexico. The total cost was around $1 billion, or 0.2 percent of gross domestic product.
Argentina, Brazil, Honduras, Nicaragua and other countries have instituted similar programs or are in the process of doing so.
The Mexican government did something unusual: It phased in Progresa in a way that made it easier to evaluate its impact. Specifically, 320 villages were randomly assigned to a treatment group that received benefits beginning in May 1998, and 186 more to a control group that did not receive benefits until 20 months later. The experiences of the control group provide a natural benchmark against which to judge how the treatment group would have fared absent Progresa.
The International Food Policy Research Institute in Washington has coordinated an extensive evaluation of Progresa. Some 24,000 households from the villages were surveyed on five occasions between 1997 and 1999. Several studies are available from www.ifpri.org. The effect on school enrollment is examined in studies by T. Paul Schultz of Yale University and Jere Behrman and Petra Todd of the University of Pennsylvania.
While more than 90 percent of rural Mexican children attend primary school, 45 percent drop out after sixth grade, when students advance to secondary school. Enrollment also falls steeply after ninth grade, when 42 percent of students leave. Increasing secondary school enrollment is a priority.
Progresa increased transitions to secondary school by nearly 20 percent. Educational attainment is estimated to eventually increase by two-thirds of a year because of Progresa. Larger effects would probably arise if benefits were extended beyond the ninth grade.
Child labor decreased as enrollment increased. Eligibility for Progresa benefits led child employment to decline by about 15 percent, according to research by Susan Parker of the Center for Research and Teaching of Economics in Mexico City and Emmanuel Skoufias, the Progresa project director for the food policy institute.
Paul Gertler, a Berkeley economist, has found that Progresa has a positive impact on participants' health, for both young children and adults.
There have been few reports of corruption in Progresa, probably because benefits are centrally distributed without involvement of local officials. Administrative costs are around 9 percent of total costs.
Behrman and Todd estimate that by raising future earning power, the educational benefits of Progresa alone exceed the costs by 40 percent to 110 percent. The effects on health and nutrition raise the benefits even further.
The fact that Progresa benefits were delayed for the control group localities - the feature that makes the evaluation results so persuasive - has generated criticism in Mexico. Given limited budgets and administrative capacity, however, the program could not possibly have been phased in everywhere at once. Random assignment of localities was arguably the fairest way to run the program. It also provided a compelling method to measure results and ensure accountability.
Moreover, the evaluation has provided powerful ammunition for advocates of the program to press for its continued existence under the new government of Vicente Fox, and in other countries. Indeed, the Fox government recently changed Progresa's name to Oportunidades but retained the program's key elements and plans to extend it to urban areas, with the help of a $1 billion loan - the largest ever - from the Inter-American Development Bank.
Progresa is effective because it addresses a root cause of low school attendance and child labor: low family income. The main determinant of whether children work or attend school - both across countries and across families - is family income. Most families in poor countries would prefer to send children to school instead of work, but they cannot afford to forgo the income their children bring home. Progresa raises family income and reduces the cost of attending school.
Although Progresa is not a panacea, it appears to more effectively increase education and reduce child labor than popular alternatives. A study by Professor Parker and David Coady of the food policy institute suggests that at least in rural sections of Mexico, Progresa is a more cost-effective way to increase enrollment than building more schools.
Worldwide, some 120 million children age 5 to 14 work full time, according to the International Labour Organization. Virtually all live in poor countries. Nearly 3 billion people live on less than $2 a day.
The $5 billion in development aid the Bush administration has requested will not have much impact given the magnitude of the problems, especially if the money is spread out over more than a handful of countries. But if the aid could be used to develop and rigorously test programs like Progresa, the knowledge garnered could stimulate more development aid and encourage poor countries to pursue more effective policies.