Conditional Public Transfers and Living Arrangements in Rural Mexico

This paper sheds light on the impact that conditional public cash transfers exert on living arrangement decisions by analyzing the effect of PROGRESA on the composition of beneficiary households. We use data collected for its evaluation and compare eligible households in communities receiving the Program to eligible households in communities not incorporated. Results based on double differences using propensity score matching compare the change in demographic composition, over a five year period, before and after the Program’s implementation. Results show that households that have benefited from the public aid are more prone to shelter new members of the extended family, who resided elsewhere prior to the intervention. Absent sons and daughters –alone or with their couples and young children-- are more prone to return home, while parents and grandparents of the household head, tend to adhere as well. We also find a partition effect of beneficiary households in which conditional transfers provide greater independence to young adults, sons and daughters of the household head, who detach from their original household and constitute their own families, even outside their community boundaries