Latin America and Caribbean

  • The Impact of Access to Free Childcare on Women's Labor Market Outcomes: Evidence from a Randomized Trial in Low-Income Neighborhoods of Rio de Janeiro

    Barros et al (2011)

    Intervention settings: Urban.

    Intervention description: Publicly provided child care.

    Methodology: Program assignment originally based on a lottery, with lottery winners getting program and losers being put on waiting list.

    Sample: Poor mothers.

    Findings: Increase in use of care (51% to 94%), mothers' employment (36%-46%) - especially among mothers not working six months before lottery (97%).

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  • Evaluating Preschool Programs When Length of Exposure to the Program Varies: A Nonparametric Approach

    Behrman, Cheng, and Todd (2004)

    Original Abstract:

    Nonexperimental data are used to evaluate impacts of a Bolivian preschool program on cognitive, psychosocial, and anthropometric outcomes. Impacts are shown to be highly dependent on age and exposure duration. To minimize the effect of distributional assumptions, program impacts are estimated as nonparametric functions of age and duration. A generalized matching estimator is developed and used to control for nonrandom selectivity into the program and into exposure durations. Comparisons with three groups-children in the feeder area not in the program, children in the program for less than or equal to 1 month, and children living in similar areas without the program-indicate that estimates are robust for significant positive effects of the program on cognitive and psychosocial outcomes with greater than or equal to 7 months' exposure, although the age patterns of effects differ slightly by comparison group. Copyright 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

    Intervention settings: Urban.

    Intervention description: Training and unemployment benefits, including a public service component, where local government and other eligible organizations propose public projects and hire ALMP participants to work on them.

    Methodology: Estimation as nonparametric functions of age and duration.

    Sample: Adults. Registered unemployed, having income less than 50% of minimum wage, employed 6 months of last 12 or recent graduate. 45% of sample had university degree.

    Findings: Statistically significant effects on the likelihood of employment, the likelihood of being employed at least once and on wage levels. Middle aged had biggest impacts. Retraining increases the probability of employment and decreases the wage for females. Program not beneficial for highly educated.

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  • The Effect of a Large Expansion of Pre-Primary School Facilities on Preschool Attendance and Maternal Employment

    Berlinski and Galiani (2007)

    Original Abstract:

    We provide evidence on the impact of a large construction of pre-primary school facilities in Argentina. We estimate the causal impact of the program on pre-primary school attendance and maternal labor supply. Identification relies on a differences-in-differences strategy where we combine differences across regions in the number of facilities built with differences in exposure across cohorts induced by the timing of the program. We find a sizeable impact of the program on pre-primary school participation among children aged between 3 and 5. In fact, we cannot reject the null hypothesis of a full take-up of newly constructed places. In addition, we find that the childcare subsidy induced by the program increases maternal employment and that this effect is in line with the one previously found for the U.S.

    Intervention settings: Urban.

    Intervention description: Between 1994-2000, created 175,000 new preschools.

    Methodology: Difference-in-differences, exploiting differences across regions and cohorts in program exposure.

    Sample: Middle-income households living in urban areas.

    Findings: Full take-up of new facilities. Increase in employment probability (7-14%).

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  • Social Protection in a Crisis: Argentina's Plan Jefes y Jefas

    Galasso and Ravaillion (2004)

    Original Abstract:

    The authors assess the impact of Argentina's main social policy response to the severe economic crisis of 2002. The program aimed to provide direct income support for families with dependents, for whom the head had become unemployed due to the crisis. Counterfactual comparisons are based on a matched subset of applicants not yet receiving the program. Panel data spanning the crisis are also used. The authors find that the program reduced aggregate unemployment, though it attracted as many people into the workforce from inactivity, as it did people who would have been otherwise unemployed. While there was substantial leakage to formally ineligible families, and incomplete coverage of those eligible, the program did partially compensate many losers from the crisis, and reduced extreme poverty.

    Intervention settings: Urban.

    Intervention description: Participants worked 20 hours per week in community work, training, school attendance or employment at a private company and in exchange received direct income support.

    Methodology: Cross-sectional and difference-in-difference propensity score matching.

    Sample: Heads of households with dependents who became unemployed as a result of Argentina's economic crisis in 2003.

    Findings: 26% of participants would have been unemployed and 23% would have been inactive without program. Study found substantial leakage to ineligibles, but the program was still well targeted at the poor.

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  • Assisting the Transition from Workfare to Work: A Randomized Experiment in Argentina

    Galasso, Ravaillion and Salvia (2001)

    Original Abstract:

    Randomly sampled workfare participants in a welfare-dependent region of Argentina were given a voucher that entitled an employer to a sizable wage subsidy. A second sample also received the option of skill training while a third sample formed the control group. Double-difference and instrumental- variables methods were used to deal with potential experimental biases, including selective compliance with the randomized assignment. Compared to the control group, voucher recipients had a significantly higher probability of employment, though their current incomes were no higher. The impact was largely confined to women and younger workers. Labor supply effects appear to have been important. Training had no significant impact. The experiment was cost effective, given that take-up of the subsidy by employers was low.

    Intervention settings: Urban.

    Intervention description: Skill training and/or vouchers for workfare participants to give to prospective employers (18 month wage subsidy).

    Methodology: RCT.

    Sample: Adult beneficiaries of temporary employment programs.

    Findings: Voucher reduced probability of unemployment (despite fact that few firms made use of the voucher). Private sector employment was 15% for voucher recipients compared to 9% for controls. Women and younger workers had largest impacts.

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  • Keeping it Simple: Financial Literacy and Rules of Thumb

    Drexler, Fischer, and Schoar (2012)

    Original Abstract:

    Individuals and business owners engage in an increasingly complex array of financial decisions that are critical for their success and well-being. Yet a growing literature documents that in both developed and developing countries, a large fraction of the population is unprepared to make these decisions. Evidence on potential remedies is limited and mixed. Two randomized trials test the impact of financial training on firm-level and individual outcomes for microentrepreneurs in the Dominican Republic. We find no significant effect from a standard, fundamentals-based accounting training. However, a simplified, rule-of-thumb training produced significant and economically meaningful improvements in business practices and outcomes.

    Intervention settings: Urban (Santo Domingo).

    Intervention description: Comparison between: 1) Standard, fundamentals-based accounting training & 2) a simplified, rule-of-thumb training that teaches basic heuristics to manage finances.

    Methodology: RCT.

    Sample: 1,193 business or personal loan clients (90% women).

    Findings: Only rule-of-thumb training produced significant improvements in business practices and outcomes (by 6-12% relative to control). Increase in sales in bad weeks. Impact pronounced for micro-entrepreneurs with poor financial literacy upfront. Impacts suggest reducing complexity of training program.

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  • Investing Cash Transfers to Raise Long-Term Living Standards

    Gertler, Martinez and Rubio-Codina (2012)

    Original Abstract:

    The authors test whether poor households use cash transfers to invest in income generating activities that they otherwise would not have been able to do. Using data from a controlled randomized experiment, they find that transfers from the Oportunidades program to households in rural Mexico resulted in increased investment in micro-enterprise and agricultural activities. For each peso transferred, beneficiary households used 88 cents to purchase consumption goods and services, and invested the rest. The investments improved the household's ability to generate income with an estimated rate of return of 17.55 percent, suggesting that these households were both liquidity and credit constrained. By investing transfers to raise income, beneficiary households were able to increase their consumption by 34 percent after five and a half years in the program. The results suggest that cash transfers to the poor may raise long-term living standards, which are maintained after program benefits end.

    Intervention settings: Rural areas in 7 states: PROGRESA.

    Intervention description: Conditional cash transfers.

    Methodology: RCT.

    Sample: HH from 506 communities.

    Findings: Per capita consumption was 5.6% higher in treatment households even 4 years after transfers to control households were initiated. (CCTs used in part to finance productive investments.)

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  • Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions

    Karlan, Dean and Martin Valdivia (2011)

    Original Abstract:

    Can one teach basic entrepreneurship skills, or are they fixed personal characteristics? Most academic and development policy discussions about microentrepreneurs focus on their access to credit, and assume their human capital to be fixed. The self-employed poor rarely have any formal training in business skills. However, a growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find that the treatment led to improved business knowledge, practices and revenues. The program also improved repayment and client retention rates for the microfinance institution. Larger effects found for those that expressed less interest in training in a baseline survey. This has important implications for implementing similar market-based interventions with a goal of recovering costs.

    Intervention settings: Urban and Rural.

    Intervention description: Freedom From Hunger training program. Measure marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. 30-60 minute entrepreneurship training sessions during normal weekly or monthly banking meeting over 1-2 years. Controls held meetings as frequently but only for loan/savings payments.

    Methodology: RCT.

    Sample: Female microfinance clients.

    Findings: Improved business knowledge and client retention rates. Using difference in differences estimation there is some evidence that training may reduce downward fluctuations in sales (26% higher in 'bad' months). Little or no evidence of changes in business revenue, profits or employment.

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  • Getting to the Top of Mind: How Reminders Increase Saving

    Karlan, McConnell, Mullainathan and Zinman (2011)

    Original Abstract:

    We develop and test a simple model of limited attention in intertemporal choice. The model posits that individuals fully attend to consumption in all periods but fail to attend to some future lumpy expenditure opportunities. This asymmetry generates some predictions that overlap with models of present-bias. Our model also generates the unique predictions that reminders may increase saving, and that reminders will be more effective when they increase the salience of a specific expenditure. We find support for these predictions in three field experiments that randomly assign reminders to new savings account holders.

    Intervention settings: Peri-urban: Western Mindanao (Philippines); Unspecified locations: Bolivia and Peru.

    Intervention description: Sending monthly reminders by text message or by letter to remind individuals who had opened savings accounts and established savings goals.

    Methodology: RCT.

    Sample: Customers of savings banks.

    Findings: Overall, savings were 6% higher in banks sending monthly reminders.

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  • Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device

    Kast, Meier and Pomeranz (2012)

    Original Abstract:

    We test the effectiveness of self-help peer groups as a commitment device for pre- cautionary savings, through two randomized field experiments among 2,687 micro- entrepreneurs in Chile. The first experiment finds that self-help peer groups are a powerful tool to increase savings (number of deposits grows 3.5-fold and average savings balance almost doubles). Conversely, a substantially higher interest rate has no effect on most participants. A second experiment tests an alternative delivery mechanism and shows that effects of a similar size can be achieved by holding people accountable through feedback text messages, without any meetings or peer pressure.

    Intervention settings: N/A (location unspecified).

    Intervention description: Peer group pressure versus increase in the real interest rate. Text message reminders one year after accounts offered.

    Methodology: RCT.

    Sample: Low-income micro-enterprise owners in 196 micro-finance groups with savings accounts in the participating bank.

    Findings: Individuals in the peer group pressure treatment group saved 3.5 times more often and had more than twice the level of accumulated savings after one year. In contrast, a higher interest rate had almost no effect on savings. The text messages alone had almost as large an effect as peer group pressure. No gender specific effects are reported.

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