Helping Children Catch Up: Early Life Shocks and the Progresa Experiment

Children who face significant disadvantage early in life are often found to be worse off years or even decades later. Can conditional cash transfer programs mitigate the negative consequences and help these children catch up with their peers? We answer this question using data from rural Mexico, where rainfall shocks can have substantial effects on household income. We find that adverse rainfall in a child's year of birth decreases grade attainment, post-secondary enrolment and employment outcomes. But declines were much smaller for children whose families were randomised to receive the conditional cash transfer program, PROGRESA: each additional year of PROGRESA exposure during childhood mitigated almost 20% of the early disadvantage in grade attainment.