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12:30 - 13:45 24 June 2015

Means-tested Social Assistance and Labor Market Informality


IFS Basement | Institute for Fiscal Studies (link Map)
7 Ridgmount Street | London | WC1E 7AE | United Kingdom

Open to: Academic | Student
Ticketing: Open

Speaker information

Marco Manacorda

In this paper we study the effect of a generous income-tested anti-poverty program in Uruguay on recipients' labor supply. When labor market informality is widespread, as in many low and middle-income countries, individuals can gain eligibility for social assistance by shifting from formal to informal employment. Using matched restricted-use social security and administrative program micro-data on the universe of applicants plus sample survey data on self reported employment status, and exploiting the discontinuous assignment to the program as a function of a baseline poverty score, we show that the program significantly reduced participation in the formal labor market and that this was largely compensated by a rise in informality. We find no overall effect on participation. We conclude by discussing the welfare implications of social assistance when informality is widespread.


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