Oportunidades has had a measurable positive impact on household consumption, thus reducing poverty and inequality. In 1994, before Mexico’s peso crisis, 21.2 percent of Mexicans lived below the poverty line. This figure had dropped to 13.8 percent in 2006. In 2004, the incidence of poverty among the program’s participants had fallen by 9.7 percent in rural areas and 2.6 percent in urban areas compared to nonparticipants. More importantly, numerous studies have demonstrated the impact of the program on children’s health, nutrition, and education.43 There has been an increase of 8 percent in the number of calories consumed, and diets have become more varied and balanced, with an increase in vegetables, fruit, and meat. Children in the Oportunidades program have 12 percent lower incidence of illnesses than nonparticipants. Children who received treatment between 12 and 36 months of age exhibit a 16 percent increase in mean growth rate per year, corresponding to 0.4 inches (1 cm) taller. Teenagers are 33 percent more likely to be enrolled in school. In rural areas, high school enrollment has doubled. Infant mortality has been reduced by 11 percent.
The program does have its problems and critics. Oportunidades does not have as much positive impact in urban areas as it does in rural areas. This could be because both the higher cost of living in urban areas and the program has been implemented in urban areas for a shorter period of time. More importantly, the program works on the demand side of the equation; it does nothing to directly increase the quantity or quality of services provided. Students go to school, but the program cannot ensure that they get a good education. For this reason, conditional cash transfers might not work in all countries, especially the poorest ones. Conditioning cash transfers on school attendance or health check-ups is inappropriate in places where these services are either absent or of dismal quality. In many poor countries, public funds and efforts should be devoted not only to increasing the demand for social services but also to expanding their supply.
However, the biggest issue is that this program cannot by itself reduce poverty, nor should it be expected to do so. Health and education can only take people so far. Few jobs in the formal sector await even educated young Mexicans. “Youths leaving school are not in general finding substantially better paid employment opportunities than their parents due to the sluggish growth of employment.”44 Job opportunities in many parts of Mexico have been declining for 25 years, which has increasingly forced people to accept subsistence living in the informal sector, or migrate to the cities or to the United States. In a 2008 New York Times article, Santiago Levy made it clear that “creating formal-sector jobs is Mexico’s central challenge.”45 Without that “it is as if Oportunidades were financing an improved labor force for the United States.”
As discussed in Chapter 6 on employment, reducing poverty through employment requires three major thrusts: (1) generate employment; (2) increase employability; and (3) make the labor markets more efficient. The Oportunidades program is targeted only at increasing the employability of poor children as they grow up to be the youth of tomorrow. More action is needed on the other dimensions. Levy, now with the Inter-American Development Bank, agrees with this view. As the same New York Times article states, “this is Levy’s latest crusade—to get Mexico to channel poor people into productive jobs in Mexico’s legal labor market.” On the whole, Oportunidades has been a successful program.