Study Overview
Using data from a randomized experiment, we find that poor rural Mexican households invested part of their cash transfers from the Oportunidades program in productive assets, increasing agricultural income by almost 10 percent after 18 months of benefits. We estimate that for each peso transferred, households consume 74 cents and invest the rest, permanently increasing long-term consumption by about 1.6 cents. Results suggest that cash transfers can achieve long-term increases in consumption through investment in productive activities, thereby permitting beneficiary households to attain higher living standards that are sustained even after transitioning off the program.
Study Results
The analysis conducted in this study provides evidence that cash transfer payments from the Oportunidades program increase consumption not only through direct expenditures out of current transfers, but also through the income generated from investing part of the transfers in farms and micro-enterprises. Beneficiary households experience large increases in participation in microenterprise activities and increased investments in farm assets and agricultural activities. Furthermore, households that receive the largest transfers are most likely to invest.