Estimating the economic and social impact of conditional cash transfers from the Prospera Program in Mexico

Abstract

This research analyses the Prospera program's impact on poverty and income distribution through a computable general equilibrium model. It concludes that transfers to households have a positive impact on the Mexican economy but hide the real problem—the low wage share—that, in the long term, prevents poverty from worsening but does not reduce the population in poverty or inequality. In a scenario without transfers, neither the population in poverty nor the Gini Index decreases significantly.

The results obtained lead to an understanding of some of the causes of the high rates of poverty and inequality in Mexico, which in turn have been perpetuated since the economic crisis of 1995. This allows the design of public policies in line with the structural needs of the economy, which combat the problem from the root that generates it, in order to contribute to the reduction of inequality in accordance with the UN Sustainable Development Goal 10.