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.

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Thanks!