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The schooling repayment hypothesis for private transfers:Evidence from the PROGRESA/Oportunidades experiment

  • Carlos Chiapa

    ()

    (Centro de Estudios Económicos, El Colegio de México.)

  • Laura Juarez

    ()

    (Centro de Investigación Económica (CIE), Instituto Tecnológico Autónomo de México (ITAM))

The schooling repayment hypothesis for private transfers predicts a positive relationship between the amount of parental investment in children’s education and the amount that adult children transfer to their parents. This paper provides evidence on the repayment motive using data from the Mexican conditional cash transfer program PROGRESA/Oportunidades. The program pays a transfer to parents for sending their children to school. Thus, if private transfers from adult children to parents are in part repayment for parental schooling investments made in the past, then PROGRESA/Oportunidades should decrease these transfers, because parents were already exogenously compensated by the government for sending their kids to school and not to work. Exploiting the exogenous variation in the amount of cash transfers a household receives from the program for sending its children to school, we compare the private transfers received in 2007 by parental households who had children 0-16 in 1997 and started receivin the programs’ bene ts in 1998 with the transfers received by similar parental households who started receiving bene ts in 1999. Our results suggest that (i) there exists a repayment motive and (ii) that PROGRESA/Oportunidades is causing adult children to transfer less resources to their parents.

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Paper provided by Centro de Investigacion Economica, ITAM in its series Working Papers with number 1201.

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Length: 45 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:cie:wpaper:1201
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  1. Skoufias, Emmanuel & Parker, Susan W., 2001. "Conditional cash transfers and their impact on child work and schooling," FCND discussion papers 123, International Food Policy Research Institute (IFPRI).
  2. Jere R. Behrman & Susan W. Parker & Petra E. Todd, 2011. "Do Conditional Cash Transfers for Schooling Generate Lasting Benefits?: A Five-Year Followup of PROGRESA/Oportunidades," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 93-122.
  3. Cox, Donald & Eser, Zekeriya & Jimenez, Emmanuel, 1998. "Motives for private transfers over the life cycle: An analytical framework and evidence for Peru," Journal of Development Economics, Elsevier, vol. 55(1), pages 57-80, February.
  4. Cheolsung Park, 2003. "Are children repaying parental loans? Evidence from Malaysia using matched child-parent pairs," Journal of Population Economics, Springer, vol. 16(2), pages 243-263, 05.
  5. Raut, Lakshmi K. & Tran, Lien H., 2005. "Parental human capital investment and old-age transfers from children: Is it a loan contract or reciprocity for Indonesian families?," Journal of Development Economics, Elsevier, vol. 77(2), pages 389-414, August.
  6. Gustavo J. Bobonis & Frederico Finan, 2009. "Neighborhood Peer Effects in Secondary School Enrollment Decisions," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 695-716, November.
  7. Luc Arrondel & André Masson, 2002. "Altruism, Exchange or Indirect Reciprocity: What do the Data on Family Transfers Show?," DELTA Working Papers 2002-18, DELTA (Ecole normale supérieure).
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