Indigenous peoples are among the poorest in Latin America, and it is often argued that social policies do not reach them. At the same time, several countries have implemented in recent years new programs for poverty reduction that should have benefited the indigenous. In this paper, we use data from Mexico's 2000 census to test whether indigenous peoples living in the southern states of Chiapas, Guerrero and Oaxaca benefit from three large government programs: PROGRESA, FISM, and PROCAMPO.

Diana Ojeda-Revah

Gabriel González-König

Oscar J. Cárdenas-Rodríguez

Quentin Wodon

English

Research Papers in Economics

DO INDIGENOUS PEOPLES BENEFIT 
FROM POVERTY PROGRAMS? 
EVIDENCE FROM MEXICO'S 2000 CENSUS* 
Oscar J. Cárdenas-Rodríguez 
Universidad de Guanajuato 
Gabriel González-Konig 
Universidad de Guanajuato 
Diana Ojeda-Revah 
COESPO, Guanajuato 
Quentin Wodon 
Poverty Group for Latin America at the World Bank 
Resumen: En Latinoamérica los indígenas pertenecen a los sectores más pobres y 
con frecuencia se argumenta que las políticas sociales no los benefician. 
Asimismo, en los últimos años varios países han instrumentado nuevos 
programas que deberían beneficiar a los indígenas. En el presente es-
tudio utilizamos datos del censo mexicano del 2000 para comprobar si 
los indígenas que viven en los estados de Chiapas, Guerrero y Oaxaca 
se han beneficiado de tres programas del gobierno: PROGRESA, FISM 
y PROCAMPO. Encontramos que estos han beneficiado más a los indí-
genas que al resto, ayudando a reducir la pobreza de forma sustancial. 
Abstract: Indigenous peoples are among the poorest in Latin America, and it is 
often argued that social policies do not reach them. At the same time, 
several countries have implemented in recent years new programs for 
poverty reduction that should have benefited the indigenous. In this 
paper, we use data from Mexico's 2000 census to test whether indige-
nous peoples living in the southern states of Chiapas, Guerrero and 
Oaxaca benefit from three large government programs: PROGRESA, 
FISM, and PROCAMPO. We find that indigenous peoples are benefit-
ing more than non-indigenous peoples from these programs, which are 
reducing poverty in a substantial way. 
Clasificación JEL: H22, 138, R58 
Fecha de recepción: 4 V 2003 Fecha de aceptación: 17 IX 2003 
* This paper is part of a study on extreme poverty and social exclusion funded 
by the Regional Studies Program in the Office of the Chief Economist for Latin 
America and the Caribbean at the World Bank, ggkonig@quijote.ugto.mx. 
125 126 ESTUDIOS ECONÓMICOS 
1. Introduction 
Estimates of the indigenous population in Latin America vary from 
30 to 60 million people (e.g. Bello y Rangel, 2000; Stavenhagen, 
1999). Due to its sheer size, Mexico has the largest indigenous pop-
ulation, followed by countries such as Guatemala, Ecuador, Bolivia, 
and Peru. There is no doubt that indigenous peoples are among the 
poorest in America, and it is often argued that social policies are not 
adequately tailored to meet their needs (e.g. Psacharopopulos and 
Patrinos, 1994; Wodon et al, 2001). However, in recent years a num-
ber of Latin American countries have implemented new programs for 
poverty reduction. While these programs should have benefited in-
digenous peoples, there is little empirical evidence on the topic due to 
a lack of good data. In Mexico, for example, the National Income and 
Consumption Survey (ENIGH) used for poverty measurement does not 
have information on indigenous status or language. 
In this paper, we use data from Mexico's 2000 census, which has 
information on language spoken, to test whether indigenous peoples 
indeed have benefited from such programs. We focus on the south-
ern states of Chiapas, Guerrero, and Oaxaca, because these are the 
three poorest states in Mexico, and they also have a large indigenous 
population. 
The census data enables us to assess who benefits from three 
large Government programs. The first program is Program for Ed-
ucation, Health, and Nutrition, PROGRESA, a cash transfer program 
implemented since 1997 and giving stipends to poor children in order 
to promote school enrollment, and support for health and nutrition 
(for details, see Skoufias, 2001, and Wodon et al, 2002). The second 
program is Municipal Fund for Social Infrastructure, FISM a decen-
tralized program promoting investments in the social infrastructure of 
poor areas since 1998 (for details, see Giugale and Webb, 2000). The 
third program is Program of Direct Payments to the Countryside, 
PROCAMPO a cash transfer program implemented in 1994 after the 
adoption of the NAFTA trade agreement to compensate farmers from 
potential losses following the liberalization of Mexico's rural economy. 
Although this program is not explicitly targeted to the poor, it does 
have large impacts on poverty (for details, see Cord and Wodon, 2001, 
and Sadoulet, Janvry and Davis, 2001). We find that overall, indige-
nous peoples are benefiting more than non-indigenous peoples from 
these programs, which are reducing poverty in a substantial way. POVERTY PROGRAMS 127 
2. Transfers for the Poor in Mexico's Census 
Per capita income in Mexico's census sample data files publicly avail-
able on the web is computed by summing up information on the 
following income sources: labor income, pensions, remittances from 
abroad, remittances from within the country, income from PROCAM¬
PO or PROGRESA, and income from capital broadly defined. Unfor-
tunately, the transfers from PROCAMPO and PROGRESA are captured 
through one question only combining the two sources of income, so 
that we cannot assess the impact of each program on poverty sepa-
rately. 
In addition to the above income sources, we can use the cen-
sus data to estimate the transfers received by municipalities through 
FISM, and, under certain assumptions the funds allocated within mu-
nicipalities to households. This section presents the FISM allocation 
formula in the Fiscal Coordination Law. The formula is based on 
a weighted average of five indicators capturing unmet basic needs 
for income, education, housing, sanitation, and energy. The overall 
poverty index for household j(IGPj) is defined by the Law as: 
IGPj = 0.4616 * Pi, + 0.1250 * P2j + 0.2386 * P3J 
+0.0608 *PAj + 0.1140 *Pbj 
Denoting income per capita for household j by yh the income 
basic needs gap measure PXj is defined as: 
PU
 = \ (419 76X18)
 i
f
 $419.76 < yj < $4,197.60 
I -0.5 if Vj < $4,197.60 
If Vj is below the poverty line of $419.76 Mexican pesos per 
month, Pu is the traditional poverty gap. A household with no in-
come at all gets a value of one for Py. If income is higher than the 
poverty line, the household gets a negative value for PXj, which may 
offset other unmet basic needs in IGPj. The potentially negative 
contribution of PXi to IGPj is capped at -0.5. 
For education, all individuals in the household at or above 14 
years of age should have completed at least their primary education (6 
years of schooling). For children below 14 years of age, a table in the 
Law indicates how many years of education should have been reached 128 ESTUDIOS ECONÓMICOS 
for each age. If an individual cannot read or write and is at least 10 
years old, a value of zero is assigned for that individual's education. 
Formally, if Ay denotes the age of individual i in household j and Ey 
denotes his/her years of schooling, the education gap at the individual 
level is computed as: 
if NEij < 1 
if NEij>l w.th 
and Aij < 9 
1 - NE^ 
NEij = < 
Eij if Aij < 8 
0 if illiterate 
and Aij > 9 
At the household level, denoting by ej the number of individuals 
for whom education gaps are estimated (this is done only for indi-
viduals older than 6), the education gap P2j is the average of the 
education gaps for individual members: 
p _ E"-i
 BH 
For housing, dwellings should have one bedroom for each set of 
three individuals, so that P3i for housing unit j is: 
_ / 1 - DEj if DE < 1 , 
PV ~ \-DEj/150 if DEj>l
 Wlt
h 
Number of bedrooms*3 
Number of individuals 
For sanitation, P4j is equal to -0.5 if the household has public 
sanitation. A septic installation yields a value of 0. A latrine yields 
0.5. Using a river, a lake, or the sea yields a value of 0.7. Households 
with no sanitation at all get a value of 1. 
Finally, the energy and cooking gap P5j is 0 if the household has 
electricity or gas. Using petroleum yields a value of 0.5. Using wood 
or coal yields a value of 0.9. 
Denoting by nj household size, and squaring IGPj to place more 
weight on the very poor, the so-called Masa Carencial MCHj of 
household j is: POVERTY PROGRAMS 129 
MOH3-\0 if IPGj<0 
Denoting by Nm the number of households in municipality m, 
and by M the number of municipalities in a given state, the share of 
state funds devoted to each municipality is defined in the Law as: 
Since state level allocations for FISM are known, we can estimate 
the allocations to municipalities using this formula. To estimate al-
locations at the household level, we assume an equal per capita or 
per household allocation within each municipality, no leakages in 
the funds, and a value for households of the projects implemented 
with the funds equal to their cost. Then, we add to the income 
per capita observed in the census data the value of FISM transfers. 
While these may be considered heroic assumptions, they are good 
enough for what concerns us here, namely whether indigenous and 
non-indigenous households are likely to benefit in the same way from 
FISM (there are no a priori reasons to believe that the potential ad-
ministrative leakages in the local use of the funds and the value for 
households of the projects implemented should differ between munic-
ipalities according to whether they have a majority of indigenous or 
non-indigenous households.) 
3. Empirical Results 
Table 1 provides estimates of the five indicators of unmet basic needs 
(income, education, housing, sanitation, and energy) for indigenous 
and non-indigenous households in Chiapas, Guerrero, and Oaxaca. 
These are the three poorest states in Mexico. Located in the south of 
the country, they all have large indigenous populations, which is why 
we focus on these states here. Information on the main indicators 
used for estimating unmet basic needs is also provided. 
Apart from high levels of unmet basic needs in each state as a 
whole, the table reveals that there are striking differences between in-
digenous households and non-indigenous households. The per capita 
income of non-indigenous households is two to three times as large 
as the per capita income of indigenous households, and correspond-
ingly, the income basic needs gap Pi is much larger among indigenous 130 ESTUDIOS ECONÓMICOS 
households. Individuals above 6 years of age among indigenous house-
holds have on average 3 to 4 years of schooling, versus 5 to 6 years for 
non-indigenous households. Literacy rates among individuals over 10 
years of age are also much higher among non-indigenous households, 
so that overall, the education gap for indigenous households is twice 
the gap observed for non-indigenous households. In sanitation and in 
energy, the differences between the indicators of unmet basic needs 
for indigenous and non-indigenous households are even larger. Only 
in housing (number of bedrooms available per household and housing 
gap) are the differences less striking. 
Table 2 provides standard poverty measurements for the three 
states, which are based on a comparison of the per capita income level 
of households to the poverty line of $419.76 Mexican pesos per month 
per person (these measurements differ from Px as defined above; in 
table 2 we rely on the standard headcount, poverty gap, and squared 
poverty gap indices as proposed by Foster, Greer and Thorbecke, 
1984). The measurements are computed including and excluding 
Government programs. The measurements observed from the Census 
include the PROCAMPO and PROGRESA transfers. Poverty measure-
ments without excluding these transfers are provided as well. Finally, 
we provide poverty measurements assuming that what is spent at the 
municipal level through FISM generates a corresponding benefit, and 
thereby a reduction in poverty, for households. This is done under 
two different scenarios: an equal per capita allocation within each 
municipality, and an equal allocation for each household (this will be 
less pro-poor since poor households tend to be larger). 
In all three states, the observed reduction in poverty obtained 
with PROCAMPO and PROGRESA is larger for indigenous households 
than for non-indigenous households, essentially because the trans-
fers they receive are also larger. Similarly, the reduction in poverty 
assumed as a result of the FISM transfer is larger for indigenous house-
holds, again because the municipalities in which they live receive 
larger transfers through FISM. Thus, the recent efforts at targeting 
social programs (especially PROGRESA and FISM, PROCAMPO is not 
targeted) to the poor in Mexico appear to have had substantial bene-
fits for indigenous peoples, at least in the southern states of Chiapas, 
Guerrero, and Oaxaca. 
4. Conclusion 
Indigenous peoples living in the southern states of Chiapas, Guer-
rero and Oaxaca in Mexico tend to be very poor, and it has some-POVERTY PROGRAMS 131 
times been argued that they do not fully benefit from Government 
programs aiming at fighting poverty. Using data from Mexico's 2000 
census, we have shown that indigenous peoples in the three states un-
der review do benefit from three large Government programs, namely 
PROGRESA, FISM, and PROCAMPO. In fact indigenous peoples bene-
fit more than non-indigenous peoples from some of these programs. 
While this represents good news, the gaps in income and other indica-
tors of well being between indigenous and non-indigenous households 
remain very large, even after taking into account the impact of the 
three programs. 
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A Class of Decomposable Poverty Measures&quot;,

Cash Transfer Programs with Multipliers: PROCAMPO in Mexico&quot;,

Do Mexico's Agricultural Programs Alleviate Poverty? Evidence from the Ejido Sector&quot;,

Etnicidad, raza y equidad en América Latina y el Caribe,

Poverty in Latin America: Trends

PROGRESA and its Impacts on Human Capital and Welfare of the Households in Rural Mexico: A Synthesis of the Results of an Evaluation, International Food Policy Research Institute,

The Impact of Public Transfers on Inequality and Social Welfare: Comparing Mexico's PROGRESA to other Government Programs&quot;, Research on Income Inequality,

The Indigenous Peoples of Latin America in a Globalized Economy&quot;,

Do indigenous peoples benefit from poverty programs? Evidence from Mexico´s 2000 census

http://codex.colmex.mx:8991/exlibris/aleph/a18_1/apache_media/R2XFMEE5IV12Q8R4ECXAP9M8I333KX.pdf

Do indigenous peoples benefit from poverty programs? Evidence from Mexico´s 2000 census

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