This paper analyzes the effect of PROGRESA education grants on school enrollment. It looks at
its effect on total school enrollment and in particular on school enrollment of drop-outs, i.e.
those children who face a re-enrollment decision since they were not enrolled in school the year
prior to the implementation of the PROGRESA program. Estimates of the impact of
PROGRESA education grants on drop-outs and non-drop-outs are obtained applying difference
estimation and maximum likelihood estimation of a reduced form equation for schooling
decision. Differences in results between both groups of children are discussed looking at the
distribution of marginal effects. PROGRESA did send drop-outs back to school. It had a larger
effect on drop-outs than on non-drop-outs. However, for the particular group of girls who
dropped out of school just before attending secondary school PROGRESA grants only had a
minor effect. This last finding highlights the fact that determinants of the schooling decision are
different for young girls and that PROGRESA grants do not provide a strong enough incentive
to send them back to school
