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An impact Evaluation of Agricultural Subsidies on Human Capital Development and Poverty Reudction: Evidence from Rural Mexico

  • Benjamin Davisky


  • Sudhanshu Handa


    (University of North Carolina, Chapel Hill)

  • Marta Ruiz


  • Marco Stampini

    (Sant'Anna School of Advanced Studies, Pisa)

  • Paul Winters

    (American University)

The Mexican Government initiated two innovative programs cash transfer schemes in the last decade: PROGRESA, which is a national anti-poverty scheme directed at chronic rural poverty, and PROCAMPO, a scheme designed to compensate farmers for the negative price effects of NAFTA. The analysis of data collected for an evaluation of PROGRESA suggests that the overall level of food consumption and health check-ups is lower among PROGRESA households that also participate in PROCAMPO. This may be due to lower outcome levels at baseline, but also because PROCAMPO households are agricultural producers and thus face a higher shadow price of time in the face of credit or labor market imperfections. In addition, PROGRESA households attain higher levels of human capital investment after only one year of program participation compared to PROCAMPO households who have been in that program for four years. And while PROCAMPO households have higher levels of investment spending, this does not lead to significantly higher levels of consumption relative to PROGRESA households. The overall conclusions are that program conditionality does influence longer-term (human capital) and medium term (productive) investment decisions, the receipt of multiple forms of treatment by beneficiaries can affect the overall impact of each individual program, and conditional transfers may have muted effects among agricultural households in the face of market imperfections.

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Paper provided by Inter-American Development Bank, Office of Evaluation and Oversight (OVE) in its series OVE Working Papers with number 0305.

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Length: 28 pages
Date of creation: Jul 2005
Date of revision:
Handle: RePEc:idb:ovewps:0305
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  1. Louise Cord & Quentin Wodon, 2001. "Do Agricultural Programs in Mexico Alleviate Poverty? Evidence from the Ejido Sector," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 38(114), pages 239-256.
  2. Sadoulet, Elisabeth & Janvry, Alain de & Davis, Benjamin, 2001. "Cash Transfer Programs with Income Multipliers: PROCAMPO in Mexico," World Development, Elsevier, vol. 29(6), pages 1043-1056, June.
  3. Skoufias, Emmanuel & Davis, Benjamin & de la Vega, Sergio, 2001. "Targeting the Poor in Mexico: An Evaluation of the Selection of Households into PROGRESA," World Development, Elsevier, vol. 29(10), pages 1769-1784, October.
  4. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
  5. J. Taylor & Irma Adelman, 2003. "Agricultural Household Models: Genesis, Evolution, and Extensions," Review of Economics of the Household, Springer, vol. 1(1), pages 33-58, January.
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