revised version published in: Labour, 2012, 26(1), 124-136
This paper models the short and medium-run impact of aid on migration, considering
alternatively the effect of unconditional and conditional cash transfers to financially
constrained households. Data from the evaluation of a Mexican development program,
Progresa, are used to estimate the effect of the potential grant size on migration. The
empirical analysis is consistent with model prediction. It shows that the program is associated
with an increase in international migration, which is also a positive function of size of potential
transfer. The grant may loosen financial constraints. At the same time, fine-tuned conditional
grants targeting prospective migrants (in the form of secondary school subsidies) reduce the
short-term migration probability. As regards medium-term migration, secondary school
beneficiaries are not more likely to migrate than the control group after they complete the
subsidised education cycle.
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