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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Gary Mena: Intended and unintended effects of unconditional cash
1. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Intended and unintended effects of unconditional cash
transfers
The case of Bolivia’s Renta Dignidad
Werner Hernani-Limarino Gary Mena
Fundación ARU
International Seminar on Social Protection, Entrepreneurship and Labour
Market Activation
Brasilia - September, 2014
2. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
1 Motivation
2 Renta Dignidad
Program Design
3 Data and Methods
Data
Methods
4 Effects
Welfare
Investments and savings
Labor market outcomes
5 Summarizing. . .
4. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Motivation
Why should we study the effects of Renta Dignidad on labor market
outcomes and household investments?
1. Important changes in Bolivia during the 2000’s, but high levels of gender
inequality in the labor market remain
According to household surveys,
Inequality (Gini) has decreased from 59 to 46 (Eid and Hernani, 2013).
Extreme and moderate poverty rates have decreased in 55 and 32%,
respectively (Hernani and Uribe, 2013).
Quality of labor market insertion (measured as pc labor income) of women
is half of that of men. (Hernani and Mena, 2014).
Gaps in labor market participation and paid employment account for almost
90% of the gap in quality of labor market insertion.
According to the census data
Important demographic changes. Dependency ratio has changed from 77.9
(2001) to 66.8% (2012).
2. Not much is known about the effect(s) of RD on labor market outcomes
and household investments in Bolivia. (Martínez (2004); Loza, Martínez y
Mendizábal (2013))
7. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Program Design
Program Design
Renta Dignidad RD is a benefit for all the Bolivians that consists of non
inheritable lifetime payments in favor of people no younger than 60 and a
burial allowance. Not the first of its kind in Bolivia, though:
1997 1998-1999 2001-2002 2003-2007 2008-2012 2013+
Bonosol Bolivida Bonosol Renta Dignidad
Annuity Monthly (cumulative)
Beneficiaries +65 +60
Contributory pensions $US 248 Suspended $US 120 $US 248 $US 21(248) $US 27 (300)
No contributory pensions $US 27 (300) $US 34 (413)
Funding: fixed share of the special direct tax on hydrocarbons (impuesto
directo a los hidrocarburos (IDH)), with contributions from all levels of
government, and dividends from capitalized public enterprises.
the current non-contributory pension scheme was included in the new
Bolivian Constitution (2009, Art. 60) as a right of Bolivian citizens
[. . . ] the state will provide an old-age pension, under the
framework of an integral social security system.
9. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Data
Why do we use households survey data
Table : Available data sources in Bolivia to study Renta Dignidad
Variables HS ’05-’11 HS 2011 EPAM 2011 ETE 2009-2010
Full sample 114,476 (29,000) 33,821 (8,851) 9,176 (2,478) ??
age2 [55, 60) 3,889 1,242 1,109 ??
age2 [60, 65) 3,132 982 925 ??
age2 [65, 70) 2,581 779 772 ??
age2 [55, 99) 13,792 4,270 3,923 ??
Labor market supply
LM participation X X X X
hours worked (intensity
X X n.a. X
of supply)
Sector of employment
Family Worker X X X X
Self-employed X X X X
Informal salaried X X ? X
Formal salaried X X n.a. X
Household variables
Income X X X X
Consumption X X X n.a.
Savings X X X n.a.
Education expenditure X X X n.a.
Health expenditure X X ? n.a.
Durables expenditure X X n.a. n.a.
Dwelling’s investment X X n.a. n.a.
Number of households in parentheses. n.a.= non available.
HS=Houhsehold surveys; EPAM=Encuesta a hogares con Personas Adultas Mayores; ETE= Encuesta Trimestral de Empleo.
10. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Data
Basic setup 2groups x 2periods case: sample sizes
For individual outcomes we have: G = {0, 1} T = {0, 1}
G0=agei 2 [55, 60) G1=agei 2 [60, 64)
T0=2005-2007
Bolivia =1,519 Bolivia =1,217
Men =716 Men =581
Women =803 Women =636
T1=2008-2011
Bolivia =2,364 Bolivia =1,912
Men =1,157 Men =944
Women =1,207 Women =968
For household outcomes we have more combinations available. They are
classified according to the age of the oldest family member. We further
classify households based on whether all of the individuals in the age
interval are men, women or if the household has both (in the age interval).
G0=agehhmaxage 2 [55, 60) G1=agehhmaxage 2 [60, 64)
T0=2005-2007
Bolivia =953 Bolivia =791
only G0 men =434 only elderly men =370
only G0 women =336 only elderly women =286
w+m =183 w+m =135
T1=2008-2011
Bolivia =1,491 Bolivia =1,289
only G0 men =709 only elderly men =603
only G0 women =509 only elderly women =460
w+m =273 w+m =226
Note: observations with 0 or missing pc income or pc consumption where excluded from household sample
11. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Data
Household outcomes (means)
Bolivia Only men IAI Only women IAI Both
[55, 60) [60, 64) DID [55, 60) [60, 64) DID [55, 60) [60, 64) DID [55, 60) [60, 64) DID
pc income (log 2012 Bs. a month)
T=0 6.32 6.19 6.39 6.29 6.32 6.09 6.18 6.12
[0.05] [0.05] 0.17 [0.07] [0.08] 0.14 [0.07] [0.09] 0.36 [0.11] [0.13] -0.11
T=1 6.51 6.55 [0.09]** 6.57 6.61 [0.13] 6.46 6.60 [0.14]*** 6.45 6.28 [0.20]
[0.03] [0.03] [0.05] [0.05] [0.06] [0.05] [0.08] [0.08]
pc consumption (log 2012 Bs. a month)
T=0 6.44 6.45 6.39 6.51 6.50 6.43 6.41 6.33
[0.03] [0.03] 0.00 [0.04] [0.04] -0.10 [0.04] [0.05] 0.11 [0.05] [0.06] 0.02
T=1 6.65 6.66 [0.05] 6.68 6.70 [0.08] 6.66 6.70 [0.09] 6.55 6.51 [0.11]
[0.02] [0.02] [0.03] [0.03] [0.03] [0.04] [0.05] [0.05]
pc labor income (thousands of 2012 Bs. a month)
T=0 0.90 0.75 1.11 0.86 0.69 0.63 0.82 0.74
[0.05] [0.05] -0.09 [0.08] [0.08] 0.05 [0.07] [0.08] -0.17 [0.09] [0.11] -0.27
T=1 1.06 0.82 [0.09] 1.18 0.98 [0.16] 0.95 0.71 [0.14] 0.94 0.59 [0.16]*
[0.05] [0.04] [0.08] [0.07] [0.07] [0.05] [0.06] [0.05]
pc non-labor income (thousands of 2012 Bs. a month)
T=0 0.26 0.31 0.26 0.28 0.30 0.37 0.23 0.25
[0.04] [0.03] 0.17 [0.08] [0.03] 0.13 [0.04] [0.05] 0.22 [0.05] [0.04] 0.17
T=1 0.14 0.35 [0.05]*** 0.14 0.31 [0.09] 0.15 0.44 [0.08]*** 0.11 0.30 [0.08]**
[0.01] [0.02] [0.02] [0.03] [0.02] [0.04] [0.02] [0.04]
pc intrahousehold transfers (thousands of 2012 Bs. a month)
T=0 0.09 0.10 0.06 0.05 0.13 0.17 0.07 0.06
[0.01] [0.02] 0.00 [0.02] [0.01] -0.01 [0.02] [0.04] 0.02 [0.03] [0.02] 0.01
T=1 0.07 0.08 [0.02] 0.06 0.05 [0.02] 0.09 0.15 [0.05] 0.04 0.03 [0.04]
[0.01] [0.01] [0.01] [0.01] [0.01] [0.03] [0.01] [0.01]
Note: Standard Errors in brackets. IAI=in age interval. Deflated with CPI base December 2012
15. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Methods
Standard difference-in-differences (linear)
Let Gi = 0, 1; Ti = 0, 1 and Ii denote the treatment defined as:
Ii =
1 if Gi = 1,Ti = 1
0 otherwise
estimate:
Yi =
18. 2Ti +
DIDIi + i (1)
to calculate the impact as:
DID
= [E[Y |G = 1,T = 1] − E[Y |G = 1,T = 0]]
−[E[Y |G = 0,T = 1] − E[Y |G = 0,T = 0]]
DID is a valid method of identification, although. . .
functional form dependency.
heterogeneity in the effect of treatment.
not possible to estimate effect of the treatment on the control.
19. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Methods
Changes-in-Changes (Athey and Imbens (2002, 2006a, 2006b))
Baseline model:
1. Y (0) = h(U,T): outcome with no treatment depends on an unknown
function h, unobservables u and time t, hence all differences across groups
are due to different unobservables u and the production function h does
not vary with group.
2. U ? T|G: distribution of U does not vary over time within a group
3. h(u, t) is monotone in u. can be relaxed in the case of discrete (binary)
outcomes
4. the support of U|G = 1 is a subset of the support of U|G = 0
analogous DID common trend assumption
20. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Methods
. . . then AI show that it is possible to identify the distribution of
Y (0)|G = 1,T = 1:
FY(0),11(y) = FY,10
F−1
Y,00 (FY,01(y))
(2)
where FY,gt (y) denotes the distribution function of Yi given Gi = g,Ti = t,
and FY(0),11(y) represents the counterfactual distribution of the treated in
T = 1 in the absence of treatment.
Thus, the average treatment effect can be written as
CIC
= E[Y (1)11 − Y (0)11] = E(Y (1)11) − E[F−1
Y,01(FY,00(Y10))] (3)
if the support assumption does not hold, it is still possible to estimate the
effect of the treatment on the quantile q:
CIC
q = F−1
Y(1)11 (q) − F−1
Y(0)11 (q) = F−1
Y(1)11 (q) − F−1
Y,01(FY,00(F−1
Y,10(q))) (4)
21. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Methods
Changes in Changes transformation
Source: Extracted from Athey and Imbens (2006).
22. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Methods
In practice we use:
the empirical cumulative distribution function
^FY,gt (y) =
PNgt
i=1 I{Ygt,i y}
Ngt
(5)
and the estimator of the inverse distribution function used is:
^F−1
Y,gt (q) = inf {y 2 Ygt : ^FY,gt (y) q} (6)
^FY(0)11(y) is estimated according to:
^FY(0)11(y) =
8
0 if y ymin,01
^FY,10(^F−1
:
Y,00(^FY,01(Y ))) if ymin,01 y ymax,01
1 otherwise.
and, CIC can be (consistently) estimated through:
^
CIC
=
PN11
i=1 Y11,i
N11
−
PN10
i=1
^F−1
01 (^F00(Y10,i ))
N10
(7)
We report bootstrapped standard errors with 1000 draws. (it is also
possible to derive analytical se)
23. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Methods
For discrete outcomes AI propose upper and lower bounds for the
counterfactual distribution.
It is possible to include covariates, that in the case of discrete outcomes
will help to improve point estimates.
1. Let ~Ygt,i = Ygt,i − X0
gt,i
24. and define
D = ((1 − T)(1 − G),T(1 − G), (1 − T)G,TG)0
2. Regress (OLS, with no constant) Yi = D0 + X0
i
25. + i
3. Obtain the augmented residuals ^Y = Yi − X0
i
26. = D0 + i , and apply the
CIC estimator.
Included X
1. Individual controls
Education attainment (years of education)
Sex
Ethnicity, multidimensional index based on three indicators: i) speaks an
indigenous language, ii) self-reported ethnicity, and iii) native language
Dummies if there are individuals in age2[0,3], [4,6],[7,15],[16,18])
Wealth index (5) quantiles (see Rutstein and Johnson (2004))
2. other controls
Rural
Regional fixed effects
for continuous variables, zero values where recoded to half the minimum
observed value to work with logs (Meyer, Viscusi, and Durbin (1995,
pp330)).
51. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Evidence of RD effects on welfare, investments and savings
Elderly Women Men W
average/M
average
Welfare
Pc income +,q0.2 0.066/0.136
(log) +q0.1 +average,q0.1,q0.2 0.371/0.128
Pc consumption +q0.2 −0.056/ − 0.077
(log) +q0.2 0.089/ − 0.075
Pc labor income −0.113/0.030
(log) -average -q0.1 −0.290/ − 0.014
Pc non-labor income +avg,q0.2,q0.5,q0.9 all+ +q0.5 0.251/0.110
(log) +avg,q0.2,q0.5,q0.8,q0.9 all+ +avg,q0.2,q0.5 3.057/1.946
Pc intra-household transfers
0.036/ − 0.016
and log
Household investments and savings
Education expenditure and
log
0/ − 0.005
Health expenditure and log 0.019/ − 0.017
Durables expenditure and log −0.012/ − 0.001
Dwelling’s investment 0.003/ − 0.003
(log) +average 0.300/0.097
Saving ratey +average +average +average 2.138/1.212
Saving ratec +q0.2 +q0.1,q0.2,q0.5 +average 0.135/0.183
- = negative effect on; + = positive effect on, and = no evidence of effect. Note: for education, health, durables and intra-household transfers
we show only for the variable in levels.
52. Motivation Renta Dignidad Data and Methods Effects Summarizing. . .
Evidence of RD effects on labor market outcomes
Elderly Women Men W
average/M
average
Labor market participation -average -average −0.10/ − 0.02
Family Worker −0.02/ − 0.004
Informal non-salaried −0.03/ − 0.02
Informal salaried −0.03/0.02
Formal salaried −0.02/0.02
Labor supply intensity -average,q.05 −3.228/0.557
(log) -average -average,q0.5 −0.416/ − 0.087
Wage −1.236/ − 0.051
(log) -average -average,q0.8 −0.714/ − 0.220
Labor income −0.293/0.121
(log) -average,q0.8,q0.9 −0.812/ − 0.216
- = negative effect on; + = positive effect on, and = no evidence of effect