Do Conditional Cash Transfers Increase Poor Households' Coping Capabilities? Accessing the Effect of Oportunidades in Poor Urban Settings in Mexico.

Abstract

This paper examines whether Mexico’s conditional cash transfer (CCT) program, Oportunidades, has an effect on poor urban households’ coping decisions when faced with an idiosyncratic shock. Poor households are often uninsured and thus have limited risk coping capabilities. While evaluations have found the program to have a positive effect on outcomes such as school enrollment and health seeking behavior, they have primarily focused on rural areas and not examined whether the program helps urban households cope with risks. This paper explores the effect of Oportunidades on poor, urban households’ risk-coping strategies by using the latest External Urban Household Evaluation Survey (ENCELURB). The results indicate that the program does not have a strong or consistent effect on the decisions households make when faced with a negative idiosyncratic shock. Rather, household characteristics seem to be more important. The paper concludes with policy recommendations and areas for future research.