Melissa Russo, Political Reporter

*Melissa Russo files notes from Mexico City, where the NYC mayor is observing a new anti-poverty initiative.

Monday morning:

It's 10 a.m. and we are headed 60 miles south of Mexico City to learn more about what it's like to live on less than a dollar a day. It's one of the areas where Oportunidades, Mexico's federal poverty alleviation program, has been tested. We are headed to the rural village of Tepoztlan, where many people live in extreme poverty, despite the area's recent popularity as a weekend tourist attraction.

The central element of Oportunidades (opportunities) is conditional cash transfers. That means the government pays the poor based on certain conditions. In order to get paid, families have to keep their children in school and take them for regular medical checkups. They also must follow nutritional guidelines. These "conditions" are designed to help lift the next generation out of the poverty trap.

Bloomberg will be implementing a similar experiment in New York City beginning this summer, using private money because the program is controversial. Bloomberg is scheduled to visit Mexico City on Tuesday.

As New York City looks to the developing world for poverty reduction advice, Mexico City residents are noting with interest the Bloomberg congestion-pricing plan. The traffic here is unbearable. Paseo de la Reforma is a parking lot, we're told, every day, keeping motorists of outer-borough distances trapped in 2-3 hour daily commutes.

Monday night:

Mayor Michael Bloomberg is expected to arrive in Toluca, the mountaintop city 67 kilometers west of Mexico City, in time for the opening of the local bank.

Hundreds of families will be lined up by the time he gets here, but not to meet New York's mayor. They'll be there to collect conditional cash transfers from the government.

Bloomberg will be there to learn more about how the nation's Oportunidades (opportunities) program works. The program pays impoverished people for better behavior. They can collect the equivalent of $18 a month, but only if they follow nutritional and educational mandates.

For instance, parents collecting the conditional cash have to feed their children Nutrisano, a nutritional supplement the Mexican government says has helped infants grow an average centimeter taller.

Five million Mexican households participate in the program, which was extended to urban areas in 2001-2002.

During a tour of Tepoztlan on Monday, New York City Deputy Mayor Linda Gibbs said Mexicans originally resented the program's mandates but have more recently come to accept them, seeing that they are helping to build better lives for their children.

Fewer Mexican children are dropping out of school to go to work. They can afford to stay in school because the government is making up the income difference.

Dressed in uniform, 13-year-old Sonia Damaso stopped to talk to WNBC on her way home from her rural Tepoztlan school Monday.

"We can have a better future," she said.

Some Mexican schoolgirls wear uniforms that include short neckties, sold on the streets here. The Oportunidades program also helps them afford school uniforms and books.

Critics argue that New York City's poverty problems won't benefit from Mexican-tailored solutions. But Bloomberg is determined to give the incentive program a try in his city, using private money, on several thousand NYC families.

Former Giuliani administration welfare commissioner, Bloomberg advisor on poverty, and Mexican native Lilliam Barrios Paoli told WNBC, "Poor people are poor people, and I think there's a lot to learn here about how people are motivated. Incentives work. Human beings respond to incentives."

Tuesday morning:

TOLUCA, Mexico -- New York City Mayor Michael Bloomberg just arrived in the town's central plaza, called Fray Andres de Castro. We hear the sounds of church bells and babies crying as Bloomberg attempts to rouse the crowd in Spanish.

"Buenos Dias!!" he says, twice, until he gets the response he wants.

Bloomberg elicits chuckles from the group with jokes about the local soccer team and his desire to taste Toluca's world-renowned chorizos.

He also discusses what New Yorkers and Mexicans have in common.

Hundreds of families are assembled under a tent for the news conference as they wait to pick up their conditional cash. Mexican officials are using the mayor's visit as an opportunity to convince their Mexican participants the Oportunidades program is a success, since Bloomberg is here to model a program after it.

Bloomberg will attend working sessions with leaders of the program Tuesday afternoon, asking questions about how to make a program like this run smoothly and how to avoid fraud.

It is interesting to note that while some Mexicans have been found to under-report their assets when applying for Oportunidades, others are ashamed of their poverty and report that they have more than they do. For instance, 40 percent of applicants who did not have toilets in their homes lied and said they did.

To qualify, Mexicans must follow specific nutritional programs and ensure school attendance and clinic visits for their children. They must survive on under $2 a day.

Bloomberg is also scheduled to meet with new Mexican President Felipe Calderon and the mayor of Mexico City this afternoon. The visit with the president will be closed to the press.