The project of ALMPs in LAC was presented at the ILO-IZA Conference in March 2016. The presentation covered the overall objective and structure of the project (e.g. review of the concept of ALMPs, policy compendium, meta-analysis, impact evaluations) and then focused specifically on the impact evaluation of the public work programme in Peru. Comments were provided by Stefan Sperlich (University of Geneva).

1. What works? Active labour market policies in
Latin America and the Caribbean
Steven Tobin and Clemente Pignatti
(ILO Research Department)
ILO-IZA Conference
March 10, 2016
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 1 / 11

2. ALMPs in LAC: Presentation of the project
Economic slowdown in LAC unveils structural weaknesses
GDP contraction in 2015, unemployment on the rise (6.5%)
Informal employment remains high (46.8%), productivity stagnates
Innovative income generation policies since the 2000s
Effective in reducing working poverty (from 18 to 8%) and inequality
Limited impact on employment quality and productivity
ALMPs for the new growth era
Expenditure in ALMPs increased in virtually all LAC countries figure 1
Little is known on nature, scope and effectiveness
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 2 / 11

3. ALMPs in LAC: (i) Policy compendium
Definition of ALMPs in developing countries (Auer et al. 2008)
Multiple objectives (i.e. not strictly employability)
Lack of indepent role – fill gaps in public services
Main findings from the policy compendium (6 countries)
Increased number of ALMPs: from 24 in the 1990s to 111 in the 2000s
Training policies most common type of interventions (44%)
Insights on the nature and scope of ALMPs in LAC
Main target groups have been youth (24%) and unemployed (19%)
Interaction between public and private sector for the implementation
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 3 / 11

4. ALMPs in LAC: (ii) Review of the literature
Two different methods to review existing knowledge
(i) Narrative literature review
(ii) Meta-analysis (with J. Kluve, University of Berlin)
Results from the review of the literature – (i) and (ii) above
Most impact evaluations in few countries – and on training
Effects of training programmes do not increase with time
Duration is the key driver of programme effectiveness
ALMPs more effective (i) in expansionary periods and (ii) for women
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 4 / 11

5. ALMPs in LAC: (iii) Impact evaluations – Argentina
Description of the Seguro de Capacitaci´on y Empleo
Conceived to reduce dependency from universal social programmes
Offerred income support in exchange of (i) visiting PES (ii)
participating in training and (iii) accepting adequate job offers
Data and methodology
Data from the Encuesta Permanente de Hogares (2006–10)
Diff-in-diff combined with propensity score matching
Summary of the results
Positive effects on wages, formality and working hours
But participants are also more likely to be inactive
Programme is more effective among women
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 5 / 11

6. ALMPs in LAC: (iii) Impact evaluations – Colombia
Description of the Agencia P´ublica de Empleo
Traditional system of PES (i.e. online and face-to-face)
Differentiate jobseekers according to their needs and provides (i) labour
counselling (ii) labour orientation and (iii) entrepreneurial support
Data and methodology
Data from the Gran Encuesta Integrada de Hogares (2008–14)
Propensity score matching using information on job-search method
Summary of the results
Positive effects on formality, but mixed effects on wages
Effects are more positive for low skilled and women
PES more effective when provided face-to-face
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 6 / 11

7. ALMPs in LAC: (iii) Impact evaluations – Peru
Motivation of the research
Public works are very popular policy tools in developing economies
Relatively high coverage across regions figure 2
Peru is a case in point in LAC (19% of all ALMPs, highest share)
Little is known with respect to their labour market effectiveness
Conclusions from developed economies cannot be generalised
Studies in developing economies look at the effects on poverty
Contribution of the present paper
Analyse the (long-term) employment effects of public works
Including considerations on the quality of employment
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 7 / 11

8. ALMPs in LAC: (iii) Impact evaluations – Peru
The programme to be evaluated
Construyendo Per´u (CP, 2007–11) had two main objectives
Improving the employability of unemployed individuals
Building small-scale infrastructures in poor areas
Three different targeting rules
(i) Geographical targeting: the FAD index
(ii) Self-targeting: Wage setting
(iii) Individual targeting: Personal characteristics
Two types of services provided to participants
Temporary employment (685,000 positions)
Training opportunities (soft skills and technical training)
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 8 / 11

9. ALMPs in LAC: (iii) Impact evaluations – Peru
Data and methodology
Three different data sources
(i) District level database to reconstruct the FAD – participating districts
(ii) National household survey – control group
(iii) Special survey of CP participants (in 2012) – treatment group
Fuzzy regression discontinuity (RD) to identify treatment effects
Use “jumps” in the probability of participation of districts around the
FAD eligibility cut-off figure 3
Compare employment outcomes of otherwise similar individuals in the
vicinity of the district-level discontinuity
Main advantage: Strong internal validity
Possible shortcoming: Difficult to generalise to entire population
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 9 / 11

10. ALMPs in LAC: (iii) Impact evaluations – Peru
Results of the estimation
Effects estimated in 2012 for participation in 2007–10
Positive effects on employment (and negative on inactivity)
But participation increases the chance of being employed informally
Participants are more likely to be working poor
Results are more positive for women and low skilled
Large set of robustness tests confirm the validity of the results
Possible interpretations
Limited employability – mostly an income support programme
Positive labour market effect might have faded away
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 10 / 11

11. ALMPs in LAC: (iii) Impact evaluations – Peru
Policy considerations
A similar programme is still in place (Trabaja Per´u). Conclusions
from the evaluation can be useful for the existing one
Enhance the training component within public works schemes
Ensure systematic organization of trainings (e.g. certifications)
Tailor training to the productive needs of the regions
Increase the lenght (or intensity) of training
Improve the design and implementation of the programme
Ensure enforcement of targeting rules
Promote data collection and evaluation practices
Increase the resources allocated to ALMPs
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 11 / 11

12. Appendix
Figure 1: Public expenditure on active and passive policies as % of GDP
Return to Presentation of the project
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 1 / 3

13. Appendix
Figure 2: Participation in public works schemes
Return to Motivation of the research
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 2 / 3

14. Appendix
Figure 3: Discontinuity in districts’ participation in CP conditional on FAD
Return to Data and methodology
Steven Tobin and Clemente Pignatti(ILO Research Department) ILO-IZA ConferenceALMPs in LAC March 10, 2016 3 / 3