Poverty dynamics and graduation from conditional cash transfers: a transition model for Mexico's Progresa-Oportunidades-Prospera program

摘要

The effects of conditional cash transfers (CCTs) on poverty and well-being have been widely studied. However, there is limited knowledge on how a CCT should respond to the dynamics of poverty. How should program administrators treat beneficiaries that exit poverty in period t-1, but exhibit a high probability of falling into poverty in period t? This is a relevant, yet unanswered question. This paper provides an analysis of the implications of poverty dynamics in the implementation of graduation strategies of CCTs, taking Mexico's Progresa-Oportunidades-Prospera (POP) program as reference case. We propose a Markovian transition model that allows to control for unobserved heterogeneity, state dependence, and attrition. The model provides a framework for a generic graduation condition that can be applied to cash transfer programs that follow well-defined eligibility income thresholds. Overall, we find that only one-third of program beneficiaries that were poor in 2002 exhibited low probabilities of becoming poor in 2009-12 and therefore could be regarded as true 'graduates' of the program. We also find that the 'recertification' process of POP-which takes place every three years-would be more efficient if it took place every 3.7 and 5.1 years in urban and rural areas, respectively.