An Experiment in Incentive-Based Welfare: The Impact of PROGRESA on Health in Mexico

We investigate the impact of a unique anti-poverty program in Mexico on health outcomes. The program, PROGRESA, combines a traditional cash transfer program with financial incentives for families to invest in human capital of children. Our analysis takes advantage of a controlled randomized study design with household panel data. We find that the program significantly increased utilization of public health clinics for preventive care. The program also lowered the number of inpatient hospitalizations and visits to private providers, which is consistent with the hypothesis that PROGESA lowered the incidence of severe illness. We found a significant improvement in the health of both children and adults.