The Anatomy of Behavioral Responses to Social Assistance When Informal Employment is High

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The disincentive effects of social assistance programs on registered employment are a first order policy concern in developing countries. Means tests determine eligibility with respect to some income threshold, and governments can only verify earnings from registered employment. The loss of benefit...

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Autores principales:	Bérgolo Sosa, Marcelo, Cruces, Guillermo Antonio
Formato:	Articulo
Lenguaje:	Inglés
Publicado:	2016
Materias:	Ciencias Económicas Welfare policy Labor supply Registered employment Labor informality
Acceso en línea:	http://sedici.unlp.edu.ar/handle/10915/124355
Aporte de:	SEDICI (UNLP) de Universidad Nacional de La Plata

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institution	Universidad Nacional de La Plata
institution_str	I-19
repository_str	R-120
collection	SEDICI (UNLP)
language	Inglés
topic	Ciencias Económicas Welfare policy Labor supply Registered employment Labor informality
spellingShingle	Ciencias Económicas Welfare policy Labor supply Registered employment Labor informality Bérgolo Sosa, Marcelo Cruces, Guillermo Antonio The Anatomy of Behavioral Responses to Social Assistance When Informal Employment is High
topic_facet	Ciencias Económicas Welfare policy Labor supply Registered employment Labor informality
description	The disincentive effects of social assistance programs on registered employment are a first order policy concern in developing countries. Means tests determine eligibility with respect to some income threshold, and governments can only verify earnings from registered employment. The loss of benefit at some level of formal earnings is an implicit tax that results in a strong disincentive for formal employment. We study an income-tested program in Uruguay and extend previous literature by developing an anatomy of the behavioral responses to this program. Our identification strategy is based on a sharp discontinuity in the program's eligibility rule and uses information from the program's records, social security administration data, and a follow-up survey. First, we establish that beneficiaries respond to the program's incentives by reducing their levels of registered employment by about 8 percentage points. Second, we find the program induces a larger reduction of formal employment for individuals with a medium probability to be a registered employee, suggesting some form of segmentation – those with a low propensity to work formally do not respond to the financial incentives of the program. Third, we find evidence that the fall in registered employment is due to a larger extent to an increase in unregistered employment, and to a lesser extent to a shift towards non-employment. Fourth, we find an elasticity of participation in registered employment of about 1.7, implying a deadweight loss from the behavioral responses to the program of about 3.2% of total registered labor income.
format	Articulo Articulo
author	Bérgolo Sosa, Marcelo Cruces, Guillermo Antonio
author_facet	Bérgolo Sosa, Marcelo Cruces, Guillermo Antonio
author_sort	Bérgolo Sosa, Marcelo
title	The Anatomy of Behavioral Responses to Social Assistance When Informal Employment is High
title_short	The Anatomy of Behavioral Responses to Social Assistance When Informal Employment is High
title_full	The Anatomy of Behavioral Responses to Social Assistance When Informal Employment is High
title_fullStr	The Anatomy of Behavioral Responses to Social Assistance When Informal Employment is High
title_full_unstemmed	The Anatomy of Behavioral Responses to Social Assistance When Informal Employment is High
title_sort	anatomy of behavioral responses to social assistance when informal employment is high
publishDate	2016
url	http://sedici.unlp.edu.ar/handle/10915/124355
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The Anatomy of Behavioral Responses to Social Assistance When Informal Employment is High

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