The Impact of Conditional Cash Transfers on Marriage and Divorce

Abstract

A growing number of less-developed countries have introduced conditional cash transfer programs in which funds are targeted to women. Economic models of the family suggest that these transfer programs may lead to marital turnover among program beneficiaries. Data from the experimental evaluation of the PROGRESA program in Mexico is used to provide new evidence on the short-run impacts of targeted transfers on couples' union dissolution and individuals' new union formation decisions. We find that, although the overall share of women in union does not change as a result of the program, marital turnover increases. Intact families eligible for the transfers experienced a modest (0.32 percentage points) increase in separation rates, with most of the effect concentrated among young and relatively educated women households. In contrast, young single women with low educational attainment levels experienced a substantial increase in new union formation rates. The marital transition patterns are consistent with the workhorse economic model of the marriage market-individuals with the greatest prospects to start new unions and those who may become more attractive in the marriage market are more likely to transition out of existing relationships and form new ones.