Mexico’s Progresa-Oportunidades and the emergence of social assistance in Latin America

This paper provides an overview of the political and economic context under which Mexico’s Progresa-Oportunidades was introduced to prelude the emergence of social assistance in Latin America. The paper identifies four distinctive features of the programme that were revolutionary in their own right. First, the Progresa-Oportunidades embraced a multidimensional approach to poverty, linking income transfers with simultaneous interventions in health, education and nutrition. Second, the programme focused on the poor. This is in clear contrast to generalised food subsidies and other targeted interventions that dominated the antipoverty agenda in the past. Third, the programme followed a complex system of identification and selection of beneficiaries to prevent discretionary political manipulation of public funds. Finally, an independent impact evaluation protocol proved to be critical for both improving the programme’s effectiveness and strengthening its legitimacy across different political factions and constituencies. The paper concludes that the success of Progresa-Oportunidades must be understood in a broader context, where a harsh economic and political environment, coupled with a rapid democratisation and increasing political competition, laid down the foundations for the introduction and then sustained expansion of the programmesocial assistance, poverty, human development, Latin America, Mexico

The impact of credit on income poverty in urban Mexico. An endogeneity-corrected estimation

In recent years, an important number of impact studies have attempted to examine the effect of credit on income poverty; however, many of these studies have not paid sufficient attention to the problems of endogeneity and selection bias. The few exceptional cases have employed econometric techniques that work at the village level. The problem is that the concept of village is inappropriate in the urban context where a large percentage of microfinance organisations in the developing world actually operate. This paper presents an econometric approach which controls for endogeneity and self-selection using data from a quasi-experiment designed at the household level, and conducted in three urban settlements in the surroundings of the Metropolitan area of Mexico City. The paper provides an estimation of the impact of credit, employing different equivalence scales in order to measure the sensitivity of the poverty impact to the intra-household distribution of welfare. We find a link between poverty impacts and lending technology. Group-based lending programmes are more effective in reducing the poverty gap but in doing so, they achieve insignificant impacts on the poverty incidence. By contrast, individual lending programmes reported significant and small impacts at the upper limits of deprivation but insignificant impacts on the poverty gap.endogeneity; selection bias; microfinance; credit; income poverty; impact analysis; Mexico

Social transfers and chronic poverty: objectives, design, reach and impact

In the first decade of the new century, social transfer programmes emerged as a new paradigm in the fight against poverty in the global South. These programmes currently reach more than 860 million people worldwide. This paper focuses on three policy questions: first, do programme objectives address chronic poverty? Second, are programme design features – the identification and selection of beneficiaries, delivery mechanisms and complementary interventions – effective in reaching chronically poor households? And third, do social assistance programmes benefit the chronically poor? The paper finds that by promoting longer-term human capital investment and protecting household assets and facilitating asset building, social transfers can directly or indirectly tackle persistent deprivation. The discussion notes that current knowledge on the outcomes of social transfers encourages strong expectations on its potential role in addressing long-term poverty, but that this can only be confirmed when current programmes reach maturity. This draws attention to the importance of extending the scope, depth and especially length of academic research into these relevant questions.social protection; chronic poverty, programme design

Microcredit, labour, and poverty impacts in urban Mexico

Improved household accessibility to credit is identified as a significant determinant of intra-household re-allocation of labour resources with important implications for productivity, income, and poverty status. However, credit accessibility could also have wider impacts on poverty if it leads to new hires outside the household. This paper contributes to the existing literature on microcredit in two important ways: first, it investigates the routes through which microcredit reaches those in poverty outside the household. We test whether, by lending to the vulnerable non-poor, microcredit programmes can indirectly benefit poor labourers through increased employment. Second, we conduct the study in the spatial dimension of urban poverty Mexico. This is relevant when considering that, unlike in rural areas, labour often represents the only source of livelihoods to the extreme poor. Our findings point to significant trickle-down effects of microcredit that benefit poor labourers; however, these effects are only observed after loan-supported enterprising households achieve earnings well above the poverty line. The paper concludes with reflections on the policy implications.Mexico, microcredit, labour, poverty

Global inequality: How large is the effect of top incomes?

In this paper, we estimate the recent evolution of global interpersonal inequality and examine the effect of omitted top incomes on the level and direction of global inequality. We propose a methodology to estimate the truncation point of household surveys by combining information on income shares from household surveys and top income shares from tax data. The methodology relies on a flexible parametric functional form that models the income distribution for each country-year point under different assumptions on the omitted information at the right tail of the distribution. Goodness-of-fit results show a robust performance of our model, supporting the reliability of our estimates. Overall, we find that the undersampling of the richest individuals in household surveys generate a downward bias in global inequality estimates that ranges between 15 per cent and 42 per cent, depending on the period of analysis, and the assumed level of truncation of the income distribution

Microcredit, Labor, and Poverty Impacts in Urban Mexico

Improved household accessibility to credit is a significant determinant of intra-household allocation of labor resources with important implications for productivity, income, and poverty status. However, credit accessibility could also have wider impacts on poverty if it leads to new hires outside the household. This paper contributes to the existing literature on microcredit in two important ways. First, it investigates the routes through which microcredit reaches those in poverty outside the household. We test whether by lending to the vulnerable non-poor microcredit can indirectly benefit poor laborers through increased employment. Second, we conduct the study in the context of urban poverty Mexico. This is relevant when considering that labor often represents the only source of livelihoods to the extreme urban poor. Our findings point to significant trickle-down effects of microcredit that benefit poor laborers; however, these effects are only observed after loan-supported enterprising households achieve earnings well above the poverty line

Quantitative analysis in social sciences: An brief introduction for non-economists

In this paper, I present an introduction to quantitative research methods in social sciences. The paper is intended for non-Economics undergraduate students, development researchers and practitioners who although unfamiliar with statistical techniques, are interested in quantitative methods to study social phenomena. The paper discusses conventional methods to assess the direction, strength and statistical significance of the correlation between two or more variables, and examines regression techniques and experimental and quasi-experimental research designs to establish causality in the analysis of public interventions

Mexico’s Progresa-Oportunidades and the emergence of social assistance in Latin America

This paper provides an overview of the political and economic context under which Mexico’s Progresa-Oportunidades was introduced to prelude the emergence of social assistance in Latin America. The paper identifies four distinctive features of the programme that were revolutionary in their own right. First, the Progresa-Oportunidades embraced a multidimensional approach to poverty, linking income transfers with simultaneous interventions in health, education and nutrition. Second, the programme focused on the poor. This is in clear contrast to generalised food subsidies and other targeted interventions that dominated the antipoverty agenda in the past. Third, the programme followed a complex system of identification and selection of beneficiaries to prevent discretionary political manipulation of public funds. Finally, an independent impact evaluation protocol proved to be critical for both improving the programme’s effectiveness and strengthening its legitimacy across different political factions and constituencies. The paper concludes that the success of Progresa-Oportunidades must be understood in a broader context, where a harsh economic and political environment, coupled with a rapid democratisation and increasing political competition, laid down the foundations for the introduction and then sustained expansion of the programm

Welfare and redistributive effects of social assistance in the Global South

This paper presents an analysis of the recent evolution of social assistance in the developing world, looking at its complex typological configuration, which has interlinked with, and partly reflects the complex demographic and epidemiological transitions and rapid urbanization and economic convergence that many developing countries have exhibited over the past decades. The paper underscores the principles of the poverty focus of social assistance and presents an overview of existence evidence of first- and second-order effects of social assistance, particularly in the domains of poverty, education, health and labour markets. Moreover, the paper highlights the knowledge gaps with regard to the longer-term and gender-specific welfare effects of social assistance, and the redistributive effects, and the incentives and distortion mechanisms that transfer programmes can generate in the labour and insurance markets