Discovery & Impact

McCourt’s Kugler discovers very long lasting impacts from cash transfer program

March 22, 2018

A new study by Professor Adriana Kugler at the McCourt School of Public Policy and recently released by the National Bureau of Economic Research finds significant long-term benefits from Mexico’s conditional cash transfer (CCT) program, known as Prospera.

Prospera currently supports about 6 million people living in poverty across Mexico, and has become a critical component of the social safety net.

“It’s important to understand that some of these programs have much more long-lasting positive effects that go beyond simply the short-term effects of poverty reduction,” McCourt professor Adriana Kugler said in a recent article from Global Citizen.

Kugler and her co-author, Ingrid Rojas, focused on the outcomes of children between 8 and 17 years of age in 1998, who were followed up to 17 years later. They discovered that households with greater exposure to CCT programs had greater increases in educational attainment and higher likelihood of quality employment.

“The program provided social protection against falling into poverty, and also improved the chances of people getting out of poverty and becoming self sufficient,” explained Professor Kugler.

According to the study, beneficiaries of the program were 36.6% to be employed than similar peers not exposed to the program. Professor Kugler also explains that the study shows increased quality of employment as “beneficiaries were 6.7% and 2.3% more likely to be formally employed and to have jobs providing non-wage benefits. Wages of beneficiaries increased by 30 cents relative to those not exposed or about 6% of the minimum wage in Mexico.” The results of the study are significant because they demonstrate that Prospera beneficiaries are more capable of receiving better wages and working conditions, entering the middle class, and providing their children with better opportunities.

Kugler told Global Citizen that this new data reinforces the argument for keeping and even expanding Prospera as Mexico grapples with its budget deficits.

“People tend to emphasize too much the potential negative consequences of public programs, how people may misuse public money,” Kugler said. “In this case it’s the opposite.”