Effect of the Juntos social program on female labor supply in Peru

Over the last ten years, the Peruvian conditional transfer program, Juntos, has expanded significantly. The objective of this program is to promote school attendance, reduce child labor, and monitor the growth and development of children in impoverished areas. Although improvements in these indicators have been appreciated, there may be unforeseen impacts on the households receiving the transfers. In this study, we focus on the program’s impact on the working hours of women in recipient households. According to the standard theory (Becker, 1965), transfers could reduce the labor supply by assuming leisure to be a normal good. According to theories of family economics, transfers to one member can affect the allocation of resources to all members of the household (Chiappori, 1992). The international empirical literature is inconclusive, pointing to non-existent, negative, and even positive effects (Alzúa, Cruces and Ripani, 2012; Gassman and Trindade, 2016). In the Peruvian case, the most similar study is that of Fernández and Saldarriaga (2014), who study the impact of the closeness of the program payment date on female labor supply, finding a negative effect during the week of payment. Our study goes further, in that: (i) we consider that transfers could result in a reallocation of resources within the household; (ii) we quantify the changes in working hours from one year to the next as a result of the program; (iii) in the light of structural econometric models, we control the main biases (unobservable heterogeneity, selection bias, and endogeneity), since it is not possible to apply an experimental design. Using the panel component of Peru’s National Household Survey (Encuesta Nacional de Hogares del Perú), we find that the Juntos program reduces the paid work of women in beneficiary households by nine hours per week.

Keywords

Conditional transfer programs, Juntos program, unforeseen impacts, selection bias, unobservable heterogeneity

JEL Classification

C23, I38, J22