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Over the past few years, a number of Latin American countries have introduced antipoverty programs specifically focused toward increasing investment in human capital, as measured, in particular, by education, but also by health and nutrition. These programs represent a significant departure from previous antipoverty policies within the region, for they are based on the premise that one of the fundamental causes of poverty and its intergenerational transmission is the lack of investment in human development. Adistinguishing characteristic of the programs is the provision of cash transfers on the condition that poor families take their children out of work and send them to school.

One of the first programs of this kind to be implemented was Mexico's Programa de Educación, Salud y Alimentación (the Education, Health, and Nutrition Program), known by its Spanish acronym, PROGRESA. Introduced in 1997, the program, which provides cash transfers, is aimed at increasing families' investment in human capital as defined by education, health, and nutrition. To achieve this objective, PROGRESA conditions cash transfers on children's enrollment and regular attendance in school, as well as clinic attendance. These transfers correspond, on average, to a 22 percent increase in the income levels of the beneficiary families and are given directly to the mother of the family. The program also includes in-kind health benefits and nutritional supplements for children up to age five and for pregnant and lactating women. PROGRESA has grown rapidly. It now covers 2.6 million families in extreme poverty in rural areas, or about 40 percent of all rural families in Mexico.

In this paper we conduct a detailed analysis of the extent to which PROGRESAhas an impact on schooling, work, and time allocation among boys and girls between eight and seventeen years of age.¹ We address several questions. Does the program reduce child labor? Does it increase participation in school activities? Does the latter occur at the expense of children's leisure time? How do the effects of the program vary by age group and gender? Our empirical analysis relies on data from a quasi-experimental design used to evaluate the program's impact. The data cover a sample of communities that receive PROGRESA benefits (treatment) and comparable communities that receive benefits at a later time (control). Our analysis is conducted in two parts, incorporating a progressively broader definition of work. In the first part we examine data from various survey instruments used in the evaluation of PROGRESA and applied to both treatment and control groups before and after program implementation. In this way we are able to estimate the program's impact using the double difference estimator that is commonly acknowledged as a preferred estimator for program evaluation. In the second part we take advantage of a module on time use, carried out about a year after program implementation. This module allows us to consider a broader definition of work that includes time allocated during the previous day to domestic and farm activities. This also allows us to examine the impact of PROGRESA on leisure.

Empirical studies based on data from other countries find that an unconditional income change has a surprisingly small marginal effect on both school enrollment and child labor.² This suggests that unconditional cash transfer programs that increase household income may have only a limited effect on increasing child school enrollment and decreasing child labor simultaneously. Cash or in-kind transfer programs that are conditioned on school enrollment may be more effective at achieving this dual objective. The conditioning of the cash transfers on schooling reduces the shadow price of schooling, which can reinforce the income effect of the cash transfer as long as schooling and work are substitutes for each other. However, an increase in child school attendance does not necessarily imply a reduction in the incidence or even in the intensity of all the kinds of work performed by children. Not all kinds of work are substitutes for schooling. Moreover, increased school attendance may reduce children's leisure time...