Can a Conditional Cash Transfer Program Improve Government Responsiveness? Evidence with Locality-Level Data from Mexico

Abstract

This paper studies the effect of the Mexican conditional cash transfer program Progresa on local government responsiveness in rural areas, measured as the proportion of households in localities with access to clean water, electricity, and an improved drainage source. Estimates which use municipal level fixed effects as well as a broad array of socioeconomic controls indicate that higher exposure to Progresa of a locality leads to significantly higher improvements of water and electricity access between the years 2000 and 2005, a result which is consistent with political economy models which predict that a conditional cash transfer program would lead to a decrease in vote buying and an increase in political participation in the areas where it is introduced. Results are robust to the use of propensity score weighting to further control for selection bias, and additional analyses indicate that improved government responsiveness is likely the primary mechanism for utilities improvements, rather than the alternative hypothesis that households improve utilities access on their own.