Intra-household Behavioral Responses to Cash Transfer Programs. Evidence from a Regression Discontinuity Design

Considering two-parent households with children, this study investigates the behavioral responses of men and women to a cash transfer program in Uruguay – Asignaciones Familiares-Plan de Equidad (AFAM-PE). We examine its effect on labor market responses, marital dissolution, and the decision-making process regarding the use of money. The assignment mechanism to the AFAM-PE exogenously alters the distribution of non-labor income across applicant households by targeting the monetary transfer (usually) to the female spouse. Our identification strategy exploits both the female targeting and a discontinuity in eligibility for enrollment into the program. Based on a regression discontinuity design and on a follow-up survey matched with program’s administrative records, this study finds that the program has significant negative effects on the formality choice of women at the eligibility cut-off. These responses seem to be associated with a lower rate of moving from unregistered jobs to formality. We also find suggestive evidence that the program results in women taking greater (perceived) responsibility for decisions in specific spheres of household expenditures. This study, represents one of the first efforts to analyze the distributional effects of CCT programs on different couples members’ behavioral responses. It offers relevant considerations for the ongoing debate about the impacts of these kind of programs on women’s agency in developing countries, suggesting the need to discuss new designs for social assistance that reduce discouraging effects on formality.