Leonardo Gasparini & Santiago Garganta: Social protection and

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This presentation is part of the programme of the International Seminar "Social Protection, Entrepreneurship and Labour Market Activation: Evidence for Better Policies", organized by the International Policy Centre for Inclusive Growth (IPC-IG/UNDP) together with Canada’s International Development Research Centre (IDRC) and the Colombian Think Tank Fedesarrollo held on September 10-11 at the Ipea Auditorium in Brasilia.

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Leonardo Gasparini & Santiago Garganta: Social protection and

  1. 1. Social protection, entrepreneurship and labour market activation Brasilia, september 2014 Social Protection and Labour Market Impacts in Argentina Leonardo Gasparini Santiago Garganta with the support of
  2. 2. Social protection in Argentina •Broad coverage for formal workers •Increasing but still partial coverage of informal workers. •Two flagship programs (since late 2000s) oMoratoria: non-contributory pensions oAsignación Universal por Hijo (AUH): CCT
  3. 3. Characteristics of AUH •Monthly cash subsidy per child (around USD 50) •Conditions •Parents should be unemployed or informal (unregistered) •Children under 18 •Compliance with education and health requirements
  4. 4. AUH is a large program •In terms of participants o30% of all children in the country o90% of children in poorest deciles •In terms of budget o0.8 % of GDP •In terms of the subsidy oBenefit per child represents 15% of mean hh income in poorest three deciles  Large compared to other programs in Argentina (Cruces and Gasparini, 2012) and to other Latin American CCTs (Stampini and Tornarolli, 2012)
  5. 5. Available data is scarce •Not an RCT •No microdata available from the Program •National household survey (EPH): not a specific question on AUH but can trace the subsidy with other questions
  6. 6. Large impact on poverty and inequality 0 10 20 30 40 50 60 1 2 3 4 5 Distribution of participants by quintile Reduction in poverty (line= USD 4 PPP) Reduction in inequality -13% -24% -30% -35% -30% -25% -20% -15% -10% -5% 0% FGT (0) FGT (1) FGT (2) -2% -13% -14% -12% -10% -8% -6% -4% -2% 0% Gini Ratio decil 10/1 Larger impact than the average in Latin America (Cruces and Gasparini, 2012).
  7. 7. The debate on unintended outcomes •Ample support to the program but debate over some unintended outcomes: oLabour informality oLabour force participation •Our research: •look for signs of unintended outcomes •using diff-in-diff •exploiting the short panel structure of EPH
  8. 8. Incentives against formalization? • Universal coverage initiatives may deteriorate the incentives to participate in the formal labor market (Galiani and Weinschelbaum (2012), Levy (2008), Antón et al. (2012)) • The presence of the program could • change decision between self-employment and formal job • reduce bargaining power of informal workers against their employers • The practical relevance of the potential disincentives can only be determined with empirical evidence.
  9. 9. Incentives against formalization? Transitions to formality Informal workers in poor households Source: Garganta and Gasparini (2014). 0510152025302005-20062006-20072007-20082008-20092009-20102010-2011Without childrenWith childrenBefore-program
  10. 10. Incentives against formalization Transitions to formality Informal workers in poor households Source: Garganta and Gasparini (2014). 0510152025302005-20062006-20072007-20082008-20092009-20102010-2011With childrenWithout childrenBefore-programAfter-program
  11. 11. The effect on labour informality (1)(2)(3) With_Children * After-0.0765***-0.0695***-0.0821*** (0.0184)(0.0167)(0.0257) With_Children (H)0.0385***0.0472***0.0562*** (0.0123)(0.0132)(0.0155) After (Post)0.108***0.152***0.186*** (0.0276)(0.0229)(0.0399) With controls, time and regional dummies NoYesYesExcluding the unemployedNoNoYesObservations16,63516,63513,777Pseudo R20.0050.0860.095 Size: estimates represent a mean reduction of around 30% in the probability of formalization for the treatment group
  12. 12. Robust to various checks Using also All1 child3 childrenMatchingDiscontinuity semester 220072008(i)(ii)(iii)(iv) (v)(vi)(vii)(viii) With_Children * After-0.0894**-0.0610**-0.0895**-0.0977***-0.0534*-0.0612***-0.009280.0259(0.0353)(0.0266)(0.0358)(0.0379)(0.0301)(0.0203)(0.0346)(0.0272) With_Children (H)0.0744***0.03230.0631***0.04880.01990.0475***0.0410*0.0457** (0.0164)(0.0237)(0.0234)(0.0352)(0.0205)(0.0118)(0.0245)(0.0193) After (Post)0.211***0.171***0.212***0.233***-0.01270.0584**0.0849**0.0298(0.0579)(0.0528)(0.0583)(0.0597)(0.0317)(0.0247)(0.0377)(0.0361) ControlsYesYesYesYesYesYesYesYesObservations10,0573,2587,7385,5711,73222,99569929094Pseudo R20.0990.1140.1020.1140.1260.0870.11520.1017Restricted sample: age (25-55)False experiments: intervention in
  13. 13. Effect is decreasing in the age of the child 0-56-1011-1415-17DisabledWith_Children * After-0.0876***-0.0707***-0.0689**-0.0551*-0.0840** (0.0258)(0.0255)(0.0326)(0.0317)(0.0339) With_Children (H)0.0531**0.0584**0.05050.03180.0165(0.0219)(0.0273)(0.0598)(0.0599)(0.0306) After (Post)0.185***0.181***0.155***0.212***0.179*** (0.0416)(0.0399)(0.0368)(0.0456)(0.0386) ControlsyesyesyesyesyesObservations8,1594,8433,6613,0372,921Pseudo R20.10020.11420.10080.12690.1023Age of youngest child
  14. 14. No effect for secondary workers with formalized primary worker PrimarySecondaryInformal primary workerFormal primary worker(i) (ii)(iii)(iv) With_Children * After-0.100**-0.0609**-0.0472*-0.0902(0.0393)(0.0262)(0.0277)(0.0644) With_Children (H)0.0919***0.01740.0223-0.175(0.0191)(0.0216)(0.0203)(0.152) After (Post)0.206***0.173***0.153***0.188* (0.0536)(0.0420)(0.0340)(0.102) Controls YesYesYesYesObservations7,4946,2835,732542Pseudo R20.0910.0920.1010.186Type of workerSecondary worker
  15. 15. No evidence for transition to informality Poorest 30%Poorest 20%Poorest 40% With_Children * After0.06920.0391-0.0271(0.0518)(0.0726)(0.0277) With_Children (H)-0.0175-0.0167-0.0298(0.0268)(0.0562)(0.0298) After (Post)-0.03430.009020.0115(0.0494)(0.0685)(0.0323) ControlsYesYesYesObservations4,8832,2618,011Pseudo R20.0040.0540.031
  16. 16. Labour force participation Is the program discouraging people from participating in the labour market? o Negative, but small, effect for women o No effect for males FemalesMalesTreat * After-0.0168*-0.00285(0.00878)(0.0121) Treat0.0307**-0.0207(0.0125)(0.0134) After-0.00911-0.0680(0.0181)(0.0420) Individual CharacteristicsYesYesRegional and time dummiesYesYes
  17. 17. Concluding remarks • Need a more open and richer debate on labor incentives of AUH o More evidence on existing programs o Interpretation of evidence o Discussion on alternative designs
  18. 18. Thanks!