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Investments, Time Preferences, and Public Transfers Paid to Women

  • 2009
  • Journal Article
Rubalcava, Luis; Teruel, Graciela & Thomas, Duncan

Publication Title: Economic Development and Cultural Change

Pages: 507-538

Abstract: The literature suggests that men and women may have different preferences. This paper exploits a social experiment in which women in treatment households were given a large public cash transfer (PROGRESA). In an effort to disentangle the effect of additional income in the household from the effect of changing the distribution of income within the household, the impact of PROGRESA income on savings and investments decisions is compared with all other income sources (after taking into account participation in the program). Additional money in the hands of women is spent on small livestock (which are traditionally managed and cared for by women), improved nutrition, and child goods (particularly clothing). Among single-headed households, PROGRESA income is not treated differently from other income. Direct evidence on intertemporal preferences gathered in the Mexican Family Life Survey indicates that women are more patient than men when thinking about the future. Taken together, the results suggest that PROGRESA income results in a shift in the balance of power within households and that women allocated more resources toward investments in the future.

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