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Abstract:
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This thesis examines whether Progresa, a cash transfer program in Mexico, functions as a food consumption smoothing mechanism against negative income fluctuations caused by idiosyncratic shocks in health or environment. It also analyses if the program has crowded-out informal private transfers received by family members living outside household for more than five years. Using panel data, I find that families participating in Progresa are more able to smooth consumption than non-participating families. Consumption is responsive to income fluctuations but not by a large amount. Moreover, consumption is largely responsive to the presence of idiosyncratic shocks; however, different environmental shocks have different impacts on consumption. Finally, there is evidence that private transfers are not responsive to the presence of the program; therefore, there is no crowding-out effect. |