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Abstract
Cash transfer programs induce multiplier effects when recipients put the money
they receive to work to generate additional income. The ultimate income effects are
multiples of the amounts transferred. This paper analyzes the PROCAMPO program in
Mexico, which was introduced to compensate farmers for the anticipated negative effect
of the North American Free Trade Agreement (NAFTA) on the price of basic crops. The
transfer rules and the timing of the panel data collected allow unique control of biases in
this impact analysis. We find that the multiplier among ejido sector recipients is in the
range of 1.5 to 2.6. Multipliers are higher for medium and large farm households, low
numbers of adults in the household, nonindigenous backgrounds, and households located
in the Center and Gulf regions. High multipliers reflect marginal income opportunities
that were unrealized due to liquidity constraints that the transfers eased. Opportunities
came from the asset endowments that these households have, particularly irrigated land,
and these opportunities were enhanced by access to technical assistance.