The Medium-Term Impact of a Conditional Cash Transfer Program
on Child Physical and Cognitive Development:
Evidence from Progresa

Arturo Aguilar
Department of Economics, ITAM

Abstract

A growing literature has shown the importance of early child development towards social and economic success later in life. Conditional cash transfer programs (CCTs) have been successfully implemented in developing countries with the purpose of reducing social inequality by creating incentives for poor households to invest in human capital. However, little evidence exists to show if CCTs improve children’s early physical and cognitive development. This question is relevant since CCTs long-term effectiveness relies, to a large extent, on the returns that children will obtain from the human capital investments promoted by the program. This paper uses data from the Mexican Progresa experiment and its 2003 follow-up survey to test if Progresa’s exposure during critical stages of early life had medium-term effects. No evidence of significant effects on physical and cognitive development outcomes (objectively measured) is found on preschool children five years after the start of the program. This contrasts with previous evidence presented in the literature. Given the considerable lag of these children’s development, the results raise concerns about the CCTs long-term effectiveness to reduce poverty and close the inequality gap.