Results demonstrate that eligible connected households that could pool resources within their family networks made different consumption and investment decisions than isolated households. Compared to connected households in comparison villages, eligible connected household and ineligible households in their family networks spent more on food, and eligible connected households invested more in their children’s education and experienced long-term improvements in household welfare.

Food Consumption: Connected households who were offered the program increased their food expenditures by 32.7 pesos (US$3.27 in March 1998) relative to those in the comparison group, nearly a 23 percent increase. Among eligible households, the cash transfer increased food expenditures by a greater amount among connected households than isolated households, even though they received transfers of similar amounts. In addition, relative to comparable households in comparison villages, the transfers increased food expenditures among ineligible households connected to eligible households by 22.6 pesos (US$2.26 in March 1998), a 16 percent increase. These increases were driven largely by changes among larger family networks, suggesting the important role that family networks play in resource distribution.

Investments: Eligible isolated households used a substantial portion of the cash transfer to purchase large livestock (cattle) in the short term, increasing the value of the cattle they owned by 887 pesos (US$88.70 in March 1998) relative to comparable isolated households in comparison villages. These households may have chosen to use their transfers to purchase livestock rather than food, because it would be difficult to otherwise finance such large investments without access to credit, and livestock could generate an additional source of income. However, these changes in livestock ownership faded within five years of the end of the program, perhaps because households chose to sell the livestock when hard economic situations arose.

Eligible connected households showed no increase in livestock investments, and instead increased their children’s enrollment in secondary education by 7.5 percentage points on average relative to comparable households in the comparison group, a 12 percent increase. These households also reduced their incidence of child labor by 3.6 percentage points relative to the comparison group. Eligible isolated households reported no differences in schooling investments or children working, and this gap in schooling investments between connected and isolated households increased over the five-year period.

Researchers hypothesize that only connected households invested in their children’s secondary education because the transfers alone were not large enough to compensate for the income lost from sending children to school instead of work. Only connected households could afford to make that investment by pooling resources with their extended families. These results suggest that when connected families have more resources, they prefer to invest in children’s schooling rather than having them work. Furthermore, there were no impacts on child labor among ineligible connected households, suggesting that family networks allocated resources to the poorest family units (those eligible for Progresa) for education investments.

The consumption and education investment gains within family networks persisted in the long term. Researchers suggest that initial increases in education investment may have enabled the increased consumption experienced later. Connected households that received cash did not return to pre-program poverty levels after five years, suggesting that the combined effect of the cash transfer and families pooling their resources might have enabled them to escape poverty traps.