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Conditional cash transfers, labor supply and informality

the case of Uruguay

VerĂ³nica Amarante
Andrea Vigorito


he aim of this paper is to identify the effect of a CCT program – namely the Uruguayan PANES- on labor market outcomes.Since PANES beneficiaries were selected on the basis of a proxy-means test, whereby only households with a score below a predetermined threshold were admitted to the program, our identification strategy is based on a sharp regression discontinuity (Imbens and Lemieux, 2008, Card and Lee, 2008). Our evaluation is based on microdata coming from two sources. On the one hand, we use a survey sample including both eligible and ineligible applicants, in the neighbourhood of the program eligibility threshold score. The other data source comes from the combination of the administrative records of application to PANES and the administrative records of the social security institution (Banco de Previsión Social, BPS). These two data sets can be matched univocally using applicants’ id numbers. This allows us to create a data set that contains, for each applicant, the information related to hiscontributions to the social security system in the period 2004-2007 (before and after theimplementation of the program).Our results indicate that PANES did not have any significant effect on activity or hours of work on the basis of the information from the survey. There is weak evidence of a positive effect on employment, implying higher probability of having a job for PANES participants. The analysis of the information from the social security records indicates that there was a lower probability of contribution to social security for PANES beneficiaries. This negative impact of the program on the probability of contributing to the social security system is associated to young men living outside Montevideo. No effect is found in the previous period, when treatment and control groups where similar in relation to the outcome variable, suggesting that differences are caused by the intervention. 

Publication Type(s)

Conference Paper

Ten Years of War Against Poverty Conference Papers

Conference: Ten Years of War Against Poverty


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