Progressing through PROGRESA: An Impact Assessment of a School Subsidy Experiment in Rural Mexico

A new antipoverty program in Mexico, PROGRESA, provides monetary transfers to families that are contingent upon their children's regular attendance at school. The benefit levels vary with the grade level and gender of the child and are intended to offset the opportunity costs of not sending children to school. The initial phase of the program was implemented as a randomized social experiment. This article uses a Markov schooling transition model applied to the experimental data to assess the impact of the subsidy program on schooling attainment and on the underlying behaviors that determine schooling attainment, including ages of matriculation, dropout rates, grade repetition rates, and school reentry rates. Results show that the program increases schooling attainment effectively by reducing dropout rates and facilitating grade progression, particularly during the transition from primary to secondary school. Many of these effects would not be clear if attention were limited to enrollments as in much of the previous literature. A simulation evaluating the effects of longer terms of exposure to the program indicates that, if children were to participate between ages 6 to 14, there would be an increase of 0.7 years in average educational attainment levels and an increase of 21% in the proportion of children attending junior secondary school, with somewhat larger effects for boys than for girls.