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

Social assistance, labor market intra-household decisions andbarganing power of women. RD evidence for Uruguay

Marcelo Bérgolo1 Estefanía Galván2

1IECON-UDELAR

2IECON-UDELAR

September 10-11, 2014 - Social Protection, entrepreneurship and labour marketactivation. Evidence for better policies, Brasilia

Estefanía Galván (IECON ) Uruguay: Impact Evaluation of AFAM-PE 1 / 22

Motivation

The expansion in the last two decades of social transfer programs in LatinAmerica, has renewed interest in analyzing how these policies affect behaviorin the labor market.

The idea that women’s empowerment is desirable for efficiency anddevelopment has shaped the political debate and the resulting economicpolicies. Thus, most of the welfare programs have tended to be directedalmost exclusively to women (Duflo 2011, Rodríguez Enríquez 2011).

Most of the empirical literature has focused on employment decisions at theindividual level. However, much less is known about the intra-householddistributional effects of these policies (Manacorda & Bosch, 2012).

Despite women being almost absolute between the beneficiaries, there is stilllittle knowledge production in relation to the implications that these programshave had in terms of gender.


Contribution

This study uses the fact that the AFAM-PE alters the distribution of unearnedincome (and through increased contributions to household income affects thebargaining power of women) in beneficiary households, - over 90% of earnersof the transfers are women- to investigate the presence of heterogeneousresponses between adult men and women in their labor supply decisions andformal employment.

Understanding the impacts of the program on outcomes in the labor marketand decision-making from the perspective of the home as well as theirimplications in terms of gender, it is important not only academically, but alsoproviding empirical evidence on these issues is key for the design of publicpolicy.


Outline

1 Background

2 Research Design

3 Data

4 Results

5 Conclusions

AFAM-PE

AFAM-PE: Means-tested transfer program. Implemented in 2008 (Ley18.227).

Beneficiaries: vulnerable households with children under 18 years and pregnants.

Principal component of the Plan de Equidad (MIDES 2007), a strategy designedby 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 childrenfrom 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

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 = β(menor18h)06 + δ(menorSech)0,6

In 2013 β=$U 1010 (USD 44), δ= $U 433 (USD 19). Average amount perhousehold in 2013 was 80 USD.

The recipient of the cash transfer is mostly (90%) the mother in beneficiaryhousehold.


Implications of the AFAM-PE in terms of gender

Women access to public resources only as mothers, appealing to the idea thatcare is considered the responsibility of mothers, and thus reinforcing thereproductive role of women and the social organization of domestic and carework (Rodríguez Enríquez 2011; Martínez Franzoni; Voorend 2008).

The transfers means a material contribution to their welbeing and its effectmay be particularly important considering that the program operates on apopulation characterized by having weak labor trajectories, and poor conditionsto participate in the labor market, due to the low levels of human capital andthe high cost given by the difficulties of reconciling work and family life.


Theoretical Predictions | Theoretical model of household

1 The unitary model: considers the household as a unit with unique preferencesthat makes decisions as one individual

All income is pooled. There is no barganingChanges in bargaining power would have no distributional effects within thehousehold

2 Household-bargaining models: household members have different utilityfunctions. Characterize the decision-making within the household as a processof barganing

Changes in bargaining power could affect differently the outcomes of household’smembersResults on household outcomes will depend on the solution to the bargainingproblem

Predictions on household labor market behaviour depend on the underlyinghousehold model.


Theoretical Predictions | Expected Effects of AFAM program onhousehold labor supply

AFAM’s cash transfer should no have distributional effects across adults withinthe beneficiary’s household in the unitary model. Policies that alterintra-household allocation of resources can generate distributional effects intheir results only under barganing models.

Predictions on the efect of AFAM-PE under the barganing model of householdIncrease in female´s bargaining power because an increase in their non-laborincomeDecrease 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 onreported earnings: higher for recipient womenReduction in registered employment for women but ambiguous effect for men


Outline

1 Background

2 Research Design

3 Data

4 Results

5 Conclusions

Research Design | Targeting Rule as Source of Identification

Exploits a quasi-random assignment into the AFAM program across applicanthouseholds

Targeting rule of applicants households imply two subsequent steps

1 Income test: Y reportedpc ≤ Y pc (based on reported sources of earnings from social

security admin. records)

2 Proxy means test: a predicted poverty score (ICCh) (based on pretreatmentcharacteristics from the application questionnaire)

Program eligibility: conditional on (1), only households with a poverty scoreabove a predetermined threshold (ICC) are selected

Neither the poverty score formula nor the specific threshold were publiclydisclosed


Assignment to AFAM: AFAM participation rate vs. Poverty Score

020

4060

8010

0

Per

cent

age

of H

ouse

hold

s

−.04 −.02 0 .02 .04 .06Predicted Poverty Score

Coef.= 98.4 ( 0.9)

The effect of the program is obtained through estimating the discontinuity in theempirical regression function at the point where the variable assignment changesfrom 0 to 1 (eligibility cut-off). The graph shows a strong discontinuity in theprobability of participating in the program as a function of the standardizedeligibility cut-off point ICC and reflects an almost perfect performance by the

allocation provided by the rule.

Research Design | Sharp Regression Discontinuity Approach

Basic regression model:

Yiz = α+ βELIGiz + f (Zi) + ηiz

withYiz = 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 variableβ 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)


Outline

1 Background

2 Research Design

3 Data

4 Results

5 Conclusions

Data | Data and Sample Construction

1 Follow-up survey. Post-treatment (45 months). Sample of eligible candidatesand ineligible next to the elegibility cut-off.

Socioeconomic data and labor market outcomes: labor force participation andregistered/informal employmentCooperation: 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-offlabor supply outcomes and socioeconomic characteristics for pre (enrollment)and post intervention (2012/2013) periods


Descriptive statics by elegibility statusMeans at baseline of Men and Women in biparental households.

Descriptive statics by elegibility statusMeans at follow-up survey of Men and Women in biparental households.

Outline

1 Background

2 Research Design

3 Data

4 Results

5 Conclusions

Results | Preliminar evidence

The following presents graphical evidence of discontinuity and the labormarket outcomes of interest.

Graphics of the outcomes of interest: employment, formal employment,informal employment and hours worked are presented as a function ofstandardized poverty index for selected sample of men and women between 18and 64 years of age for two-parent households.


Employment Rate vs Poverty ScoreWomen

3040

5060

7080

9010

0

Em

ploy

men

t Rat

e (%

)


Coef.= −4.6 ( 9.6)

Men

7080

9010

0

Em

ploy

men

t Rat

e (%

)


Coef.= −2.2 ( 4.5)

The graphs suggest that aggregate employment falls on the threshold, ie when thehousehold 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 employmentrate does not appear to be statistically significant at the usual levels.

Registered Employment Rate vs Poverty ScoreWomen

010

2030

4050

6070

8090

Reg

iste

red

Em

ploy

men

t Rat

e (%

)


Coef.= −18.9 ( 9.9)

Men

2030

4050

6070

8090

Reg

iste

red

Em

ploy

men

t Rat

e (%

)


Coef.= −9.3 ( 10.9)

A sharp decline in formal employment of adults in eligible households to AFAM-PEis observed. This effect appears to be more important for women.

Informal Employment Rate vs Poverty ScoreWomen

010

2030

4050

60

Info

rmal

Em

ploy

men

t Rat

e (%

)


Coef.= 14.8 ( 9.7)

Men

010

2030

4050

60

Info

rmal

Em

ploy

men

t Rat

e (%

)


Coef.= 7.0 ( 10.7)

Informal employment increases sharply at eligibility cut-off.

Hours worked (intensive) vs Poverty ScoreWomen

2025

3035

4045

Num

ber

of H

ours

Wor

ked

(h>

0)


Coef.= 3.4 ( 4.7)

Men

3035

4045

5055

60

Num

ber

of H

ours

Wor

ked

(h>

0)


Coef.= 0.0 ( 3.9)

No significant changes are observed in hours worked at eligibility cut-off

Results | RD regressions

Econometric analysis: the estimated treatment effect of AFAM-PE on theprobability of participating in the program and the results of the labor marketare presented for the selected sample: eligible and ineligible individuals form18 to 64 years old in two-parent households.

RD models are estimated separately for men and women given the objective ofanalyzing heterogeneous effects by gender.

Specifications with different order of polynomials for f (.) are reported: notpolynomials, first order, cubic and quadratic.


RD estimates of AFAM-PE effect on labor market outcomesMen and Women in biparental households

Estimates suggest heterogeneous effects by gender. A negative effect of AFAM-PEon the employment rate for elegible women around eleigibility cut-off is observed,although not robust across specifications. A significant reduction between 19 and22 percentage points in formal employment is observed for elegible women aroundeleigibility cut-off and this result is robust for all the specifications considered.

RD estimates of AFAM-PE effect on labor market outcomesMen and Women in biparental households

When introducing controls in the estimations, the results remain: negative effect ofAFAM-PE on the employment rate for elegible women around eleigibility cut-off isobserved. Although, estimates are not robust across specifications. A significantreduction between 19 and 22 percentage points in formal employment is observed.

RD estimates of AFAM-PE effect on labor market outcomes. Splinemodel

Men and Women in biparental households

Results remain when for registed employment when a more flexible RD model isestimated.

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 thehusband in t-1.The decline in registered employment seems to be explained by asignificant growth in unregistered employment for elegible women whose husbands

were not employed in the pre-treatment.

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

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 isestimated.

RD estimates of AFAM-PE effect on labor market outcomes,conditional on the pre-treatment labor status of the wifeMen´s labor outcomes conditional on women labor status

RD estimates of AFAM-PE effect on intrahousehold decision: whodecides on food expensesSpecification with controls

The results suggest a significant growth between 12 and 19 porcentual points inthe probability that the woman decide on food expenses for elegible women around

eleigibility cut-off. This robust across specifications

RD estimates of AFAM-PE effect on intrahousehold decision: whodecides on food expenses

Spinline specification with controls

When a more flexible RD model is estimated the growth in the probability that thewoman decide is remained. Aditionally, a decline in the probability that both decide

is observed.

RD estimates of AFAM-PE effect on intrahousehold decision: Whodecides on aditional moneySpecification with controls

RD estimates of AFAM-PE effect on intrahousehold decision: Whodecides on aditional money

Spinline specification with controls.

An increase in the probability that the woman decide on aditional money isobserved. However, those estimates are not robust across specifications.

Robustness: manipulation concerns

Concern 1. The assignment to AFAM favored adults with worse labor marketoutcomes

Test: RD estimates using pre-policy outcomes


Effect of AFAM on Employment in pre-policy period: WomenRD Estimates with Different Polynomial Specifications

Quadratic Spline

Linear Spline

Cubic

Quadratic

Linear

No Score Controls

Pol

ynom

ial S

peci

ficat

ions

for

F(.

)

−0.30 −0.20 −0.10 0.00 0.10 0.20 0.30

Estimated Coefficients (p.p)

Point Estimate 90% CI

No evidence of discontinuity on employment at baseline

Effect of AFAM on Employment in pre-policy period: MenRD Estimates with Different Polynomial Specifications

Quadratic Spline

Linear Spline

Cubic

Quadratic

Linear

No Score Controls

Pol

ynom

ial S

peci

ficat

ions

for

F(.

)

−0.30 −0.20 −0.10 0.00 0.10 0.20 0.30



No evidence of discontinuity on employment at baseline


Concern 2. Some households filled the application questionnaire strategicallyto gain eligibility

Test: RD estimates using pre-policy individual/household socioeconomiccharacteristics


Effect of AFAM on Baseline Covariates: WomenRD Estimates by using a Quadratic Spline Model

Age

Schooling

Montevideo

Household Head

No Hsld. Members

Avg. Age in Hsld

Avg. School. in Hsld

Cov

aria

tes

−4.00 −2.00 0.00 2.00 4.00



Effect of AFAM on Baseline Covariates: MenRD Estimates by using a Quadratic Spline Model

Quadratic Spline

Linear Spline

Cubic

Quadratic

Linear

No Score Controls

Pol

ynom

ial S

peci

ficat

ions

for

F(.

)

−0.30 −0.20 −0.10 0.00 0.10 0.20 0.30



With some exceptions (schooling for men) no evidence of discontinuities ofcovariates at baseline


Concern 3. There is an excess of bunching of household just above theeligibility threshold

Test: Graphical inspection on density of poverty score and testing fordiscontinuity at the eligibility threshold (McCrary 2008)


McCrary Test (2008)

05

1015

20D

ensi

ty

−.04 −.02 0 .02 .04 .06 .08

Predicted Poverty Score

We cannot reject the null: density of poverty score is the same close to thediscontinuity point

Outline

1 Background

2 Research Design

3 Data

4 Results

5 Conclusions


Conclusions

This paper explores for different responses between men and women withinthe household as a result of AFAM-PE. A statistically significant reduction informal employment of women is observed, which appears to be associatedwith both a reduction in labor force participation as an increase in informalemployment.

These responses are heterogeneous according to the employment status oftheir partner (men) pre-policy. However, there were no statistically significanteffects on employment outcomes of men within the household.

These results present suggestive evidence that rejects the possibility of aunitary household model, and is in line with recent studies finding evidencethat the outcomes of the household are affected by the distribution ofintra-household bargaining power (Lundberg, Pollak, and Wales 1997 to ,Duflo 2003; Rangel 2006; Martínez, 2013, Novella et al, 2013).


Conclusions

Implications for research agenda:Advance in the analysis of economic empowerment of women through cualitativemethods.More studies in latin american countries that analyze the effect of genderrecipient of cash transfers on the well-being of the household´s members.

Implications for policy designNeed of new designs that address disincentives to the formal employmentintroduced by the income testing.

Relevance of combining cash transfer programs with policies that enhance theeffects of the transfer on women’s empowerment. In particular, policies thatpromote access to good quality care services for children, elder adults anddisabled.


Thank you!

www.iecon.ccee.edu.uy

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

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