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

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

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.

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.

Outline
1 Background
2 Research Design
3 Data
4 Results
5 Conclusions

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.

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 =

(menor18h)06 + (menorSech)0,6
In 2013

=$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.

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.

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.

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

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

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.

Research Design | Sharp Regression Discontinuity Approach
Basic regression model:
Yiz = +

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

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)

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

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

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

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.

Employment Rate vs Poverty Score
Women
30 40 50 60 70 80 90 100
Employment Rate (%)
−.04 −.02 0 .02 .04 .06
Coef.= −4.6
( 9.6)
Men
70 80 90 100
Employment Rate (%)
−.04 −.02 0 .02 .04 .06
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.

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
Coef.= −18.9
( 9.9)
Men
20 30 40 50 60 70 80 90
Registered Employment Rate (%)
−.04 −.02 0 .02 .04 .06
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.

Informal Employment Rate vs Poverty Score
Women
0 10 20 30 40 50 60
Informal Employment Rate (%)
−.04 −.02 0 .02 .04 .06
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
( 10.7)
Informal employment increases sharply at eligibility cut-off.

Hours worked (intensive) vs Poverty Score
Women
20 25 30 35 40 45
Number of Hours Worked (h0)
−.04 −.02 0 .02 .04 .06
Coef.= 3.4
( 4.7)
Men
30 35 40 45 50 55 60
Number of Hours Worked (h0)
−.04 −.02 0 .02 .04 .06
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 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.

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.

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

RD estimates of AFAM-PE effect on labor market outcomes. Spline
model
Results remain when for registed employment when a more flexible RD model is
estimated.

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.

conditional on the pre-treatment labor status of the wife
Men´s labor outcomes conditional on women status

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.

conditional on the pre-treatment labor status of the wife
Men´s labor outcomes conditional on women labor status

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

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.

RD estimates of AFAM-PE effect on intrahousehold decision: Who
decides on aditional money
Specification with controls

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.

Robustness: manipulation concerns
Concern 1. The assignment to AFAM favored adults with worse labor market
outcomes
Test: RD estimates using pre-policy outcomes

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

Effect of AFAM on Employment in pre-policy period: Men
RD Estimates with Different Polynomial Specifications
Quadratic Spline
Linear Spline
Cubic
Quadratic
Linear
No Score Controls
No evidence of discontinuity on employment at baseline

Concern 2. Some households filled the application questionnaire strategically
to gain eligibility
Test: RD estimates using pre-policy individual/household socioeconomic
characteristics

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

Effect of AFAM on Baseline Covariates: Men
RD Estimates by using a Quadratic Spline Model
Quadratic Spline
Linear Spline
Cubic
Quadratic
Linear
No Score Controls
With some exceptions (schooling for men) no evidence of discontinuities of
covariates at baseline

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)

McCrary Test (2008)
0 5 10 15 20
Density
−.04 −.02 0 .02 .04 .06 .08
We cannot reject the null: density of poverty score is the same close to the
discontinuity point

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