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The Effects of a Conditional Transfer Program on the Labor Market: The Human Development Bonus in Ecuador

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  • Martin Gonzalez-Rozada

    ()

  • Freddy Llerena Pinto

    ()

Abstract

In this paper we estimate the impact of a conditional transfer program, the Bono de Desarrollo Humano, over several labor market outcomes in Ecuador. We use the BDH’s targeting mechanism and rely on a regression discontinuity (RD) strategy to isolate the causal effects of the program over the duration of unemployment, the probability of transiting from unemployment to informal employment and the probability of separation from formal employment. We find that (i) mothers with BDH benefits and workers living in households having the BDH program experience a longer duration in unemployment than the comparable group of workers that do not have those benefits; (ii) the program does not had distortive effects on the finding probability of an informal job for mothers and workers living in households with BDH benefits while it seems to have financed the search process for workers living in households with benefits during the period 2005-2006; and (iii) the BDH program increases the probability of separation for mothers having the benefits with respect to the comparable group of mothers that do not have those benefits. These impacts suggest that the government has some room to intervene in the labor market to try to eliminate or at least reduce the negative effects of the program.

Suggested Citation

  • Martin Gonzalez-Rozada & Freddy Llerena Pinto, 2011. "The Effects of a Conditional Transfer Program on the Labor Market: The Human Development Bonus in Ecuador," Department of Economics Working Papers 2011-04, Universidad Torcuato Di Tella.
  • Handle: RePEc:udt:wpecon:2011-04
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    References listed on IDEAS

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    1. David Card & Raj Chetty & Andrea Weber, 2007. "Cash-on-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1511-1560.
    2. Ponce, Juan & Bedi, Arjun S., 2010. "The impact of a cash transfer program on cognitive achievement: The Bono de Desarrollo Humano of Ecuador," Economics of Education Review, Elsevier, vol. 29(1), pages 116-125, February.
    3. Imbens, Guido W. & Lemieux, Thomas, 2008. "Regression discontinuity designs: A guide to practice," Journal of Econometrics, Elsevier, pages 615-635.
    4. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-209, January.
    5. Rafael Lalive & Jan Van Ours & Josef Zweimuller, 2006. "How Changes in Financial Incentives Affect the Duration of Unemployment," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 1009-1038.
    6. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-782, July.
    7. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
    8. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
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    Citations

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    Cited by:

    1. Ryan Nehring, 2012. "Social Protection in Ecuador: A New Vision for Inclusive Growth," Policy Research Brief 28, International Policy Centre for Inclusive Growth.
    2. Edwin A. Goñi Pacchioni, 2013. "Andemic Informality: Assessing Labor Informality, Employment and Income Risk in the Andes," IDB Publications (Books), Inter-American Development Bank, number 82329 edited by Inter-American Development Bank (IDB), February.
    3. repec:idb:idbbks:461 is not listed on IDEAS
    4. María Gabriela Palacio, 2016. "Institutionalizing segregation Conditional cash transfers and employment choices," WIDER Working Paper Series 091, World Institute for Development Economic Research (UNU-WIDER).
    5. Scarlato, Margherita, 2012. "Social Enterprise, Capabilities and Development: Lessons from Ecuador," MPRA Paper 37618, University Library of Munich, Germany.
    6. María Gabriela Palacio, 2016. "Institutionalizing segregation Conditional cash transfers and employment choices," Working Paper Series UNU-WIDER Working Paper w, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Cash transfer programs; regression discontinuity; duration models; Logit and multinomial Logit models.;

    JEL classification:

    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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