Workfare programs and their delivery system effectiveness of construyendo Perú

This paper estimates the medium- to long-term effects of the workfare program Construyendo Perú, implemented in Peru from 2007 to 2011, to support unemployed populations in situations of poverty and extreme poverty. The paper finds that the intervention helped raise employment and reduce inactivity for certain groups of beneficiaries but at the cost of locking participants in lower quality jobs (i.e. informal and paid below the poverty line). Particularly, the program was not able to improve the perspectives of lower-educated participants in terms of job quality (although it was in terms of employment) and exacerbated the job quality perspectives of women, men, and higher-educated individuals. In terms of the mechanisms, it appears that the shift from infrastructure- to service-sector-related projects during the last two years—which were less costly, of shorter duration, and had no training component—exacerbated the effects of the program. The evaluation is carried out through a regression discontinuity approach, which exploits for the first time an interesting assignment rule of the program at the district level, namely, only districts above a certain level of poverty and development shortcomings were eligible to participate.