Control of Resources, Bargaining Power and the Demand of Food: Evidence from PROGRESA

I use a structural model of households to recover how much resources each individual controls in the context of the Mexican PROGRESA program. I find that the eligibility to receive the cash transfers induces a redistribution of resources from the father to both the mother and children, although the mother is the one benefiting the most. With these information I compute individual poverty rates and quantify to what extent the program reduces within-household inequality. I also combine these measures to construct a proxy for women’s bargaining power and, using causal identification techniques, I estimate its direct effects on household demand for food. Exploiting random assignment of the cash transfers as an instrumental variable for the treatment of interest, I show that mothers having majority control of household resources relative to fathers increase food consumption as a share of the household budget by 6.5-8.3 percent. I use these estimates to argue that, by knowing (i) The distribution of pre-program resources inside the household, and (ii) How much influence each decision maker can have on the desired policy outcome, a policymaker can improve the cost-effectiveness of a cash transfer program by targeting the cash to resource shares in addition to gender.