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Mexico's Oportunidades Program Fails to Make the Grade in NYC


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									E d u c a T i o n

Mexico’s Oportunidades Program
Fails to Make the Grade in NYC
By Brett Fawley and Luciana Juvenal

                                                                                 Children in school in norogachi, Mexico.    © T yrone Turner/naTional GeoGraphic SocieT y/corbiS

N      ew York City Mayor Michael Bloom-
       berg announced in March that his
city would not be extending the program
                                                 on the receipt of that cash force investment
                                                 in “human capital,” ideally lessening future
                                                 dependence on the state. To infer that
                                                                                                        percent, and by 17 it was 26 percent. Where
                                                                                                        did they go? At 11 years of age, 4.26 and
                                                                                                        1.69 percent of boys and girls, respectively,
Opportunity NYC-Family Rewards. Aimed            Opportunity NYC failed due to fundamen-                reported being employed. By age 16, those
at alleviating the burden of poverty among       tal differences between rural poverty in               numbers were 48.65 for males and 13.22
the city’s most disadvantaged citizens, the      Mexico and urban poverty in the United                 percent for females.3
privately funded conditional cash transfer       States, however, neglects that—beyond                     The Oportunidades program was designed
(CCT) program was introduced in Septem-          name, objective and CCTs—the programs                  to address the financial constraints prevent-
ber 2007 as the first comprehensive initiative   themselves were fundamentally different.               ing students from continuing their educa-
of its kind to be attempted in the developed     The purpose of this article is to clarify why          tion. Every two months, eligible mothers of
world.1 Three years later, the program that      the programs must be considered indepen-               students with attendance of at least 85 per-
many, including the mayor, had hoped             dently and to highlight one story that the             cent received a cash subsidy. This subsidy,
would compete for public funding is instead      data from Opportunity NYC told.2                       compensating for approximately 40 percent
scheduled to end in August.                                                                             of the child’s lost wages, increased with age
   Meanwhile, in Mexico, the CCT program         Oportunidades: Enabling                                and earning power, an acknowledgement of
that directly inspired its New York cousin is      Each year, teenagers around the globe                the root cause of dropping out.
widely considered a success. Fourteen years      drop out of school not because they fail to               Of the 506 very similar poor rural com-
                                                                                                        munities initially selected to receive the
To infer that Opportunity NYC failed due to fundamental dif-                                            benefits of the program, eligible families
                                                                                                        in 320 randomly chosen communities
ferences between rural poverty in Mexico and urban poverty                                              were designated to receive the first round
in the United States, however, neglects that—beyond name,                                               of benefits in 1998.4 Immediately, the
                                                                                                        “treated” villages saw a statistically signifi-
objective and CCTs (conditional cash transfers)—the programs                                            cant increase in enrollment compared with
themselves were fundamentally different.                                                                the “control” villages, which did not receive
                                                                                                        cash subsidies. The percent of 14-, 15- and
ago, Oportunidades (then PROGRESA)               appreciate the opportunities education offers          16-year-olds enrolled in school increased by
initiated cash payments to 300,000 impov-        but because they cannot afford the invest-             16, 5 and 6 percent respectively.5
erished rural families for actively managing     ment. The economic concept of opportunity                 The potential for CCTs to positively influ-
their health and keeping their children in       cost, which captures the mutually exclusive            ence school drop-out rates is not confined
school. Today, having survived multiple          nature of decisions, permits this even when            to the developing world. British and Aus-
political regimes, the program provides          school is free. In developing countries such           tralian programs that offered financially
direct cash support to 5 million poor Mexi-      as Mexico, where compulsory education and              eligible students regular cash payments
can families (86 percent from rural areas)       child labor laws exist but are poorly enforced,        for staying in school are credited with an
at an annual cost of $3.62 billion.              the opportunity cost of education (not earn-           average four percentage point increase in
   The overarching objective and means of        ing a wage) is often prohibitively high for            the proportion of low-income students
achieving that objective were the same in        the poor. Original survey data collected by            maintaining post-compulsory enrollment.
both programs: impede the intergenera-           Oportunidades demonstrates this. As late as            The full impact is not completely ascrib-
tional transmission of poverty by use of         11 years of age, 92 percent of the rural Mexi-         able to drawing employed students back to
CCTs. Cash today lessens the strains of          can children who were surveyed were still              school (estimates are that two-thirds of the
poverty immediately; conditions imposed          in school. By 15, that number dropped to 39            increase in U.K. enrollment is attributable to
10 The Regional Economist | July 2010
Effect on 9th-Graders Attempting and Earning 11 or More Units in the First Year of Opportunity NYC                                                               EndnotEs
                                                                                                                                                                 1   Beneficiaries of CCTs receive direct cash
                                                       Academically Prepared                                        Academically Unprepared
                                                                                                                                                                     payments in return for taking specific actions
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