Prospering through prospera: a dynamic model of CCT impacts on educational attainment and achievement in Mexico

This paper develops and estimates a dynamic model, which integrates value‐added and school‐choice models, to evaluate grade‐by‐grade and cumulative impacts of the Mexican Prospera conditional cash transfer (CCT) program on educational achievement. The empirical application advances the previous literature by estimating policy impacts on learning, accounting for dynamic selective school attendance, and incorporating both observed and unobserved heterogeneity. A dynamic framework is critical for estimating cumulative learning effects because lagged achievements are important determinants of current achievements. The model is estimated using rich nationwide Mexican administrative data on schooling progression and mathematics and Spanish test scores in grades 4-9 along with student and family survey data. The estimates show significant CCT impacts on learning and educational attainment, particularly for students from poorer households. Results show that telesecondary schools (distance learning) play a crucial role in facilitating school attendance and in fostering skill accumulation.