Marcelo Bérgolo & Estefanía Galván: Social assistance, labor market intra-household decisions 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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Marcelo Bérgolo & Estefanía Galván: Social assistance, labor market intra-household decisions and

  1. 1. Social assistance, labor market intra-household decisions and barganing power of women. RD evidence for Uruguay Marcelo Bérgolo1 Estefanía Galván2 1IECON-UDELAR 2IECON-UDELAR September 10-11, 2014 - Social Protection, entrepreneurship and labour market activation. Evidence for better policies, Brasilia Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 1 / 22
  2. 2. Motivation The expansion in the last two decades of social transfer programs in Latin America, has renewed interest in analyzing how these policies affect behavior in the labor market. The idea that women’s empowerment is desirable for efficiency and development has shaped the political debate and the resulting economic policies. Thus, most of the welfare programs have tended to be directed almost exclusively to women (Duflo 2011, Rodríguez Enríquez 2011). Most of the empirical literature has focused on employment decisions at the individual level. However, much less is known about the intra-household distributional effects of these policies (Manacorda & Bosch, 2012). Despite women being almost absolute between the beneficiaries, there is still little knowledge production in relation to the implications that these programs have had in terms of gender. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 2 / 22
  3. 3. Contribution This study uses the fact that the AFAM-PE alters the distribution of unearned income (and through increased contributions to household income affects the bargaining power of women) in beneficiary households, - over 90% of earners of the transfers are women- to investigate the presence of heterogeneous responses between adult men and women in their labor supply decisions and formal employment. Understanding the impacts of the program on outcomes in the labor market and decision-making from the perspective of the home as well as their implications in terms of gender, it is important not only academically, but also providing empirical evidence on these issues is key for the design of public policy. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 3 / 22
  4. 4. Outline 1 Background 2 Research Design 3 Data 4 Results 5 Conclusions
  5. 5. Outline 1 Background 2 Research Design 3 Data 4 Results 5 Conclusions
  6. 6. AFAM-PE AFAM-PE: Means-tested transfer program. Implemented in 2008 (Ley 18.227). Beneficiaries: vulnerable households with children under 18 years and pregnants. Principal component of the Plan de Equidad (MIDES 2007), a strategy designed by the government to address the phenomenon of poverty and inequality, configured as a set of permanent policies. Replaces existing noncontributory social assistance programs: Ingreso Ciudadano (PANES), 2005-2007. Transfer program for low-income households with children (AFAM-MR), 2004 - 2008. Management: Social Security Administration (BPS). In early 2008 the AFAM-PE transfers performed at 275 thousand children from vulnerable households, while reaching almost 406 thousand in 2013. Government budget for the program in 2012 was just over 0.41% of GDP. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 6 / 22
  7. 7. AFAM-PE Monthly amount of the benefit differs according to: Number and age of the children Educational level attending Adjusted for equivalence scale: AFAM − PEh =
  8. 8. (menor18h)06 + (menorSech)0,6 In 2013
  9. 9. =$U 1010 (USD 44), = $U 433 (USD 19). Average amount per household in 2013 was 80 USD. The recipient of the cash transfer is mostly (90%) the mother in beneficiary household. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 7 / 22
  10. 10. Implications of the AFAM-PE in terms of gender Women access to public resources only as mothers, appealing to the idea that care is considered the responsibility of mothers, and thus reinforcing the reproductive role of women and the social organization of domestic and care work (Rodríguez Enríquez 2011; Martínez Franzoni; Voorend 2008). The transfers means a material contribution to their welbeing and its effect may be particularly important considering that the program operates on a population characterized by having weak labor trajectories, and poor conditions to participate in the labor market, due to the low levels of human capital and the high cost given by the difficulties of reconciling work and family life. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 8 / 22
  11. 11. Theoretical Predictions | Theoretical model of household 1 The unitary model: considers the household as a unit with unique preferences that makes decisions as one individual All income is pooled. There is no barganing Changes in bargaining power would have no distributional effects within the household 2 Household-bargaining models: household members have different utility functions. Characterize the decision-making within the household as a process of barganing Changes in bargaining power could affect differently the outcomes of household’s members Results on household outcomes will depend on the solution to the bargaining problem Predictions on household labor market behaviour depend on the underlying household model. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 9 / 22
  12. 12. Theoretical Predictions | Expected Effects of AFAM program on household labor supply AFAM’s cash transfer should no have distributional effects across adults within the beneficiary’s household in the unitary model. Policies that alter intra-household allocation of resources can generate distributional effects in their results only under barganing models. Predictions on the efect of AFAM-PE under the barganing model of household Increase in female´s bargaining power because an increase in their non-labor income Decrease in female´s employment/working hours (income effect) Increase in male´s employment/working hours (income effect) Increase in informal employment because income testing acts as implicit tax on reported earnings: higher for recipient women Reduction in registered employment for women but ambiguous effect for men Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 10 / 22
  13. 13. Outline 1 Background 2 Research Design 3 Data 4 Results 5 Conclusions
  14. 14. Research Design | Targeting Rule as Source of Identification Exploits a quasi-random assignment into the AFAM program across applicant households Targeting rule of applicants households imply two subsequent steps 1 Income test: Y reported pc Y pc (based on reported sources of earnings from social security admin. records) 2 Proxy means test: a predicted poverty score (ICCh) (based on pretreatment characteristics from the application questionnaire) Program eligibility: conditional on (1), only households with a poverty score above a predetermined threshold (ICC) are selected Neither the poverty score formula nor the specific threshold were publicly disclosed Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 12 / 22
  15. 15. Assignment to AFAM: AFAM participation rate vs. Poverty Score 0 20 40 60 80 100 Percentage of Households −.04 −.02 0 .02 .04 .06 Predicted Poverty Score Coef.= 98.4 ( 0.9) The effect of the program is obtained through estimating the discontinuity in the empirical regression function at the point where the variable assignment changes from 0 to 1 (eligibility cut-off). The graph shows a strong discontinuity in the probability of participating in the program as a function of the standardized eligibility cut-off point ICC and reflects an almost perfect performance by the allocation provided by the rule.
  16. 16. Research Design | Sharp Regression Discontinuity Approach Basic regression model: Yiz = +
  17. 17. ELIGiz + f (Zi ) + iz with Yiz = outcome variable of individual i with poverty score Z Registered employment, unregistered employment, non-employment Zi = standardized forcing variable, Zi=ICCi − ICC f (Zi ) = function capturing the effect of Z on Y ELIGiz = 1[Zi 0], treatment variable
  18. 18. treatment effect (eligibility to AFAM) on outcome variable Identification assumption: local continuity of f (Zi ) (Hahn et al. 2001) i.e. no (precise) manipulation of the assignment variable Z Estimation: different polynomial approximation of f (.) (Lee Lemieux 2010) Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 14 / 22
  19. 19. Outline 1 Background 2 Research Design 3 Data 4 Results 5 Conclusions
  20. 20. Data | Data and Sample Construction 1 Follow-up survey. Post-treatment (45 months). Sample of eligible candidates and ineligible next to the elegibility cut-off. Socioeconomic data and labor market outcomes: labor force participation and registered/informal employment Cooperation: Ministry of Social Development / BPS / UDELAR (IECON). 2 Application Form to AFAM-PE - Baseline. Socioeconomic variables and labor market outcomes. Sample of two-parent households with children under 18: 1,097 adults (eligible and non-eligible) close to the cut-off labor supply outcomes and socioeconomic characteristics for pre (enrollment) and post intervention (2012/2013) periods Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 16 / 22
  21. 21. Descriptive statics by elegibility status Means at baseline of Men and Women in biparental households.
  22. 22. Descriptive statics by elegibility status Means at follow-up survey of Men and Women in biparental households.
  23. 23. Outline 1 Background 2 Research Design 3 Data 4 Results 5 Conclusions
  24. 24. Results | Preliminar evidence The following presents graphical evidence of discontinuity and the labor market outcomes of interest. Graphics of the outcomes of interest: employment, formal employment, informal employment and hours worked are presented as a function of standardized poverty index for selected sample of men and women between 18 and 64 years of age for two-parent households. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 20 / 22
  25. 25. Employment Rate vs Poverty Score Women 30 40 50 60 70 80 90 100 Employment Rate (%) −.04 −.02 0 .02 .04 .06 Predicted Poverty Score Coef.= −4.6 ( 9.6) Men 70 80 90 100 Employment Rate (%) −.04 −.02 0 .02 .04 .06 Predicted Poverty Score Coef.= −2.2 ( 4.5) The graphs suggest that aggregate employment falls on the threshold, ie when the household is eligible for AFAM-PE. In particular, this effect appears to be more important in the case of the woman. However the discontinuity in the employment rate does not appear to be statistically significant at the usual levels.
  26. 26. Registered Employment Rate vs Poverty Score Women 0 10 20 30 40 50 60 70 80 90 Registered Employment Rate (%) −.04 −.02 0 .02 .04 .06 Predicted Poverty Score Coef.= −18.9 ( 9.9) Men 20 30 40 50 60 70 80 90 Registered Employment Rate (%) −.04 −.02 0 .02 .04 .06 Predicted Poverty Score Coef.= −9.3 ( 10.9) A sharp decline in formal employment of adults in eligible households to AFAM-PE is observed. This effect appears to be more important for women.
  27. 27. Informal Employment Rate vs Poverty Score Women 0 10 20 30 40 50 60 Informal Employment Rate (%) −.04 −.02 0 .02 .04 .06 Predicted Poverty Score Coef.= 14.8 ( 9.7) Men 0 10 20 30 40 50 60 Informal Employment Rate (%) Coef.= 7.0 −.04 −.02 0 .02 .04 .06 Predicted Poverty Score ( 10.7) Informal employment increases sharply at eligibility cut-off.
  28. 28. Hours worked (intensive) vs Poverty Score Women 20 25 30 35 40 45 Number of Hours Worked (h0) −.04 −.02 0 .02 .04 .06 Predicted Poverty Score Coef.= 3.4 ( 4.7) Men 30 35 40 45 50 55 60 Number of Hours Worked (h0) −.04 −.02 0 .02 .04 .06 Predicted Poverty Score Coef.= 0.0 ( 3.9) No significant changes are observed in hours worked at eligibility cut-off
  29. 29. Results | RD regressions Econometric analysis: the estimated treatment effect of AFAM-PE on the probability of participating in the program and the results of the labor market are presented for the selected sample: eligible and ineligible individuals form 18 to 64 years old in two-parent households. RD models are estimated separately for men and women given the objective of analyzing heterogeneous effects by gender. Specifications with different order of polynomials for f (.) are reported: not polynomials, first order, cubic and quadratic. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 25 / 22
  30. 30. RD estimates of AFAM-PE effect on labor market outcomes Men and Women in biparental households Estimates suggest heterogeneous effects by gender. A negative effect of AFAM-PE on the employment rate for elegible women around eleigibility cut-off is observed, although not robust across specifications. A significant reduction between 19 and 22 percentage points in formal employment is observed for elegible women around eleigibility cut-off and this result is robust for all the specifications considered.
  31. 31. RD estimates of AFAM-PE effect on labor market outcomes Men and Women in biparental households When introducing controls in the estimations, the results remain: negative effect of AFAM-PE on the employment rate for elegible women around eleigibility cut-off is observed. Although, estimates are not robust across specifications. A significant reduction between 19 and 22 percentage points in formal employment is observed.
  32. 32. RD estimates of AFAM-PE effect on labor market outcomes. Spline model Men and Women in biparental households Results remain when for registed employment when a more flexible RD model is estimated.
  33. 33. RD estimates of AFAM-PE effect on labor market outcomes, conditional on the pre-treatment labor status of the husband Women´s labor outcomes conditional on men labor status The results suggest heterogeneous effects conditional on the labor status of the husband in t-1.The decline in registered employment seems to be explained by a significant growth in unregistered employment for elegible women whose husbands were not employed in the pre-treatment.
  34. 34. RD estimates of AFAM-PE effect on labor market outcomes, conditional on the pre-treatment labor status of the wife Men´s labor outcomes conditional on women status
  35. 35. RD estimates of AFAM-PE effect on labor market outcomes, conditional on the pre-treatment labor status of the husband Women´s labor outcomes conditional on men labor status Results remain when for registed employment when a more flexible RD model is estimated.
  36. 36. RD estimates of AFAM-PE effect on labor market outcomes, conditional on the pre-treatment labor status of the wife Men´s labor outcomes conditional on women labor status
  37. 37. RD estimates of AFAM-PE effect on intrahousehold decision: who decides on food expenses Specification with controls The results suggest a significant growth between 12 and 19 porcentual points in the probability that the woman decide on food expenses for elegible women around eleigibility cut-off. This robust across specifications
  38. 38. RD estimates of AFAM-PE effect on intrahousehold decision: who decides on food expenses Spinline specification with controls When a more flexible RD model is estimated the growth in the probability that the woman decide is remained. Aditionally, a decline in the probability that both decide is observed.
  39. 39. RD estimates of AFAM-PE effect on intrahousehold decision: Who decides on aditional money Specification with controls
  40. 40. RD estimates of AFAM-PE effect on intrahousehold decision: Who decides on aditional money Spinline specification with controls. An increase in the probability that the woman decide on aditional money is observed. However, those estimates are not robust across specifications.
  41. 41. Robustness: manipulation concerns Concern 1. The assignment to AFAM favored adults with worse labor market outcomes Test: RD estimates using pre-policy outcomes Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 37 / 22
  42. 42. Effect of AFAM on Employment in pre-policy period: Women RD Estimates with Different Polynomial Specifications Quadratic Spline Point Estimate 90% CI Polynomial Specifications for F(.) −0.30 −0.20 −0.10 0.00 0.10 0.20 0.30 Linear Spline Cubic Quadratic Linear No Score Controls Estimated Coefficients (p.p) No evidence of discontinuity on employment at baseline
  43. 43. Effect of AFAM on Employment in pre-policy period: Men RD Estimates with Different Polynomial Specifications Quadratic Spline Point Estimate 90% CI Polynomial Specifications for F(.) −0.30 −0.20 −0.10 0.00 0.10 0.20 0.30 Linear Spline Cubic Quadratic Linear No Score Controls Estimated Coefficients (p.p) No evidence of discontinuity on employment at baseline
  44. 44. Robustness: manipulation concerns Concern 2. Some households filled the application questionnaire strategically to gain eligibility Test: RD estimates using pre-policy individual/household socioeconomic characteristics Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 40 / 22
  45. 45. Effect of AFAM on Baseline Covariates: Women RD Estimates by using a Quadratic Spline Model Age Schooling Montevideo Covariates Household Head No Hsld. Members Avg. Age in Hsld Avg. School. in Hsld Point Estimate 90% CI −4.00 −2.00 0.00 2.00 4.00 Estimated Coefficients (p.p)
  46. 46. Effect of AFAM on Baseline Covariates: Men RD Estimates by using a Quadratic Spline Model Quadratic Spline Point Estimate 90% CI Polynomial Specifications for F(.) −0.30 −0.20 −0.10 0.00 0.10 0.20 0.30 Linear Spline Cubic Quadratic Linear No Score Controls Estimated Coefficients (p.p) With some exceptions (schooling for men) no evidence of discontinuities of covariates at baseline
  47. 47. Robustness: manipulation concerns Concern 3. There is an excess of bunching of household just above the eligibility threshold Test: Graphical inspection on density of poverty score and testing for discontinuity at the eligibility threshold (McCrary 2008) Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 43 / 22
  48. 48. McCrary Test (2008) 0 5 10 15 20 Density −.04 −.02 0 .02 .04 .06 .08 Predicted Poverty Score We cannot reject the null: density of poverty score is the same close to the discontinuity point
  49. 49. Outline 1 Background 2 Research Design 3 Data 4 Results 5 Conclusions Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 44 / 22
  50. 50. Conclusions This paper explores for different responses between men and women within the household as a result of AFAM-PE. A statistically significant reduction in formal employment of women is observed, which appears to be associated with both a reduction in labor force participation as an increase in informal employment. These responses are heterogeneous according to the employment status of their partner (men) pre-policy. However, there were no statistically significant effects on employment outcomes of men within the household. These results present suggestive evidence that rejects the possibility of a unitary household model, and is in line with recent studies finding evidence that the outcomes of the household are affected by the distribution of intra-household bargaining power (Lundberg, Pollak, and Wales 1997 to , Duflo 2003; Rangel 2006; Martínez, 2013, Novella et al, 2013). Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 45 / 22
  51. 51. Conclusions Implications for research agenda: Advance in the analysis of economic empowerment of women through cualitative methods. More studies in latin american countries that analyze the effect of gender recipient of cash transfers on the well-being of the household´s members. Implications for policy design Need of new designs that address disincentives to the formal employment introduced by the income testing. Relevance of combining cash transfer programs with policies that enhance the effects of the transfer on women’s empowerment. In particular, policies that promote access to good quality care services for children, elder adults and disabled. Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 46 / 22
  52. 52. Thank you! www.iecon.ccee.edu.uy

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