Why do Beneficiaries Leave the Safety Net in Mexico? A Study of the Effects of Conditionality on Dropouts

Summary This paper analyzes the characteristics of beneficiaries who drop out of the Mexican conditional cash transfer program Oportunidades to determine if dropping out of the program is a result of self-targeting by the non-poor or the exclusion of the target poor population. Using Oportunidades' administrative data and a discrete duration model, the analysis indicates that wealthier beneficiaries have greater odds of dropping out, suggesting that conditionality acts as a screening device. The results also indicate that administrative factors and the provider of health services to beneficiaries also have an important influence on whether beneficiaries remain in or leave the program.