The conditional cash transfer programme Oportunidades has shown to be an important tool in increasing school enrolment, particularly in rural areas. However, success in urban areas has been moderate and there should be room for substantial improvements in its effectiveness. The key issue in urban areas is of course the abundance of labour market opportunities for young people. In this paper we use a dynamic model to consider the possibility of restructuring the grant to improve its effectiveness, possibly without increasing it costs. We have shown, that transferring the funds to children attending Secundaria and above can increase participant from a peak of 7.5% to 9%. By transferring al resources to Preparatoria students alone the increase in participation there can be as high as 19%. However, if the increase in the secondary education grants is obtained reducing or eliminating the primary school grants, we need to consider a number of important issues such as effects on nutrition, school performance of young children, as well as policies to improve education quality, not just take-up.
Inter-American Development Bank, Education Division - SCLWorking Paper #1, 32 pp.