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“With their effort and one opportunity”: alleviating extreme poverty in Chile
Emanuela GalassoDevelopment Research Group, The World
Bank
Presentation at the Inter-American Development Bank
February 20, 2007
Outline1. Context2. The (complex) nature of the intervention 3. The evaluation challenge: identification
strategy4. Empirical method5. Data. Sampling issues6. Results7. Extensions, refinements 8. Conclusions/looking forward
1. The context: poverty trends in the 1990s
• Sustained growth in 1990s in Chile (average 4.5%)
o With stable distribution, overall poverty rate went down. stable reduction poverty incidence
o growth did not trickle down to the extreme poor o despite:
Increases over time in spending on social sectors
highly targeted social assistance
Poverty assessment
1. The context: constraints for households in extreme poverty?
Low take-up of means-tested social programs among the poorest: the problem compounded by the multidimensionality of their needs and deprivations coupled with exposure to correlated shocks.
Echoes welfare literature in the US (Moffitt 1983, Currie 2003)..o Lack of information about their existence, rules, benefitso Stigma o Transaction costs/Administrative barriers
…and the new behavioral economics (Bertrand, Mullainathan, Shafir 2006)o Time-inconsistency (costs born today, benefits in the future)o Time horizon?o ‘Small hassle costs’ may dissuade from action
CCTs work around the problem by using conditionalities
1. The context: novelty diagnostics importance of psychosocial dimension Households are excluded from the network of social
assistance/protection. Lack of communication between public institutions and beneficiaries. Vertical relationship. o Need to be visible and feel they can access the system
when needed.
psycho-emotional dimension as a household endowment: The principal asset that indigent households have is their desire to live as a family and their complex web of mutual support that it entails. o Starting point is to restore this asset by reactivating
capacity to project themselves forward by expand the set of opportunities “desesperanza aprendida” vs capacity to project
forward. Reactivation willingness to take charge (‘salir adelante’, ‘surgir en la vida’, develop ‘un projecto de vida’)
Capacity to activate actions, self-esteem
1. The program Chile Solidario Government proactively introduced in 2002 a social
protection program targeted to the extreme poor. Flagship program of former president Lagos,
instituted by lawo Scaled up a pilot program (Puente) nationally.
(bottom 5%: 225,000 beneficiary households)o Comprehensive/innovative approach focused on
both demand and supply side
• Demand side: multidimensional aspects of deprivation. Psychosocial support
• Supply side: proactive supply of assistance and protection (vs working on demand), reorganize supply to attend the multiple needs of such target population
o All municipalities in the country agreed to participateo Households are eligible to participate based on their
proxy means score (based on ficha CAS)o i.e. targeting based on correlates of ‘chronic’ poverty
o Households starting with the lowest CAS scores are nvited to participate in the program by the municipality. About 96% accept. Enter intensive phase w/social worker
2. The nature of the intervention Demand side
Intensive phasePsycho-social support
2 years
Follow-up phase
3 years
2. The nature of the intervention Demand side: (i) “working directly with the families”
Multidimensionality of welfare and ‘rights’ operationalized through a set of a set of minimum conditions (‘condiciones minimas’) along different dimensions of well-being (identification, family dynamics, education, health, housing, employment, income)
Social worker visits regularly the participating families at their place: Diagnostics: families share problems and identify
priorities. acknowledge their assets and discuss deprivations along the 7 dimensions and (first 6 months)
identify conditions with highest priority (degree of deprivation and vulnerability): households sign partial contracts with the social workers (compromisos especificos)
Intensive phasePsycho-social support
2 years
2. The nature of the intervention Demand side: (ii) short term assistanceIntensive phase
Psycho-social support2 years
• Access to targeted monetary transfers
Follow-up phase
3 years
Cash transfers Bono
proteccion Bono egreso
elicit demand of social assistance/transfer program to which participating households are already eligible to (family allowances, public pensions, water subsidy, subsidy for school retention)
cash transfer in the first 2 years tapered over time (21$/month first 6 months, to 6$/month last 6 months)
smaller cash transfer in the follow-up phase
2. The nature of the intervention Demand side: (iii) medium term -promotionIntensive phase
Psycho-social support2 years
• preferential access to social services
Follow-up phase
3 years
Help develop household endowments (assets, skills, abilities, knowledge, autonomy) to:
know how/where to access system when faced by shocks if needed
sustain their exit from extreme poverty in the medium/long runEx. priority access to public primary health care, priority access to public employment programs, schools visited by beneficiary households receive vouchers for school retention
2. The nature of the intervention Comparison with other CCT programs:o Dimensions go beyond health and educationo Short term cash assistance complemented with
programs aimed at strengthening earning capacity/remove structural constraints. Implicit social protection role: make the red de proteccion social when faced by a shock
o Cash transfer (bono de protección) size: median share of income 6-7% , vs 22% Mexico, 25%
Honduras, Nicaragua Average monthly transfer PPP-adjusted per family: US 22$
vs 82$ Mexico (62 education, 21 nutrition), 85$ Nicaragua
o Cash transfer (and intervention) with a specific time-limit (policy debate about exit strategies for other CCTs)
o Conditionality: not attached to behavioral requirement (school attendance, health visits). Risk being dropped by the program if not showing effort towards the partial contracts
2. The nature of the intervention Supply side: “re-orientation public services” Reach out and identify households in needs rather
than responding passively to demand by applicants Allow coordination of the local services:
existence/availability but also ‘pertinencia’ of the supply side to meet the needs of the target population
Social workers in the municipality coordinated by a municipal employee (head Unidad de Intervencion Familiar) – focal point all actors involved in the provision of services
Over time, some local municipalities introducing new activities tailored to the target group (creation ‘redes locales de intervencion’) “social protection system”
3. The evaluation challenge: questions
Was the program effective in improving in lifting the targeted households out of extreme poverty (and suggestive channels)
Future questions: sustainability and dynamics: o what happens to the participants after they
live the program?o Does the program helps households to
sustain their exit from extreme poverty over time?
o what are the characteristics of those households that are more/less successful in doing so? Move beyond mean impact
3. The evaluation challenge…
Very complex intervention Impact develop over time MIDEPLAN asked for World Bank’s TA in
2003, after project had started. Program already in place, staggered in 4 waves (2002-2005), starting from the bottom of the CAS distribution and up
With aimed universal coverage of the extreme poor, can we find comparable non-participants? (issue of common support)
3. In the quest for identification: features of program design/implementation
1. Different distributions of the scores across areas: households within municipalities are sequentially invited to participate to the program, by starting from the bottom up of their CAS distribution. But the support and distribution varies across municipalities
dens
ity
CAS
commune level CAS distribution
CAS threshold
3. In the quest for identification: features of program
design/implementation2. Cut-off points for eligibility are different
across different geographic areas (based on population/poverty rates)
dens
ity
CAS
commune level CAS distribution
4. Empirical methodology Households invited to participate based on
an observable score Different distribution and range of the CAS
across municipalities/regions Cutoff thresholds vary across
municipalities/regions [observed]two households with the same CAS score but living in two different municipalities/regions face different probability of being exposed to the program
4. Empirical methodology
1. regression discontinuity design (comparing households around cutoff) (parametric van der Klaaw 2002; Chay, McEwan, Urquiola 2005)
Underlying assumptions: probability participation discontinuous around
the cutoff No discontinuity in the counterfactual
outcomes at the cutoff
]|[]|[ SYESYE ii
S
2. Average treatment effect for the participants estimated by matching on the CAS score (Abadie, Imbens 2006):
under unconfounded assignment (selection based on observables):
Conditioning on the score, adjusting for any underlying differences in exogenous background characteristics
)](,1|)0()1([ xSDYYET
)()1(),0( iiii XSYYD
4. Empirical methodology
Agreed to add a module on Chile Solidario to the forthcoming nationally representative household survey (CASEN) in November 2003.
Captured (and over-sampled) participants in the early cohorts (2002-2003)
Subsequent participants (2004-2005) identified in the original CASEN by cross-checks with the administrative data
Plan: follow up longitudinally a selected sub-sample of participants and ‘matched’ comparison group of non-participants over time (one-year intervals) until 2009
5. Data
5. Data: Structure of the panel
Admin. Data PANEL ‘06CS participants CASEN ‘03 PANEL’ 04
CASEN ’06
225,000 73,000 13,0008,200
2002
2003
2004
2005
5. Data
• Order in the score (CAS) followed over time
0
.2
.4
.6
.8
1
350 400 450 500 550 600
CAS score
2002 cohort 2003 cohort2004 cohort 2005 cohort
base Puente, may 2005
CAS cumulative distribution by cohort
5. Data: CAS distribution and cutoff ranges
Panel sample 2003-2004: households with CAS score
0.0
05.0
1.0
15.0
2kd
ensi
ty c
as
300 400 500 600 700x
Puntajes CAS y Puntajes de corte
5. Data: non parametric plots around cutoff
.5.5
5.6
.65
.7.7
5en
rollm
ent
in s
cho
ol 6
-15
-20 -15 -10 -5 0 5 10 15 20cas relative to cutoff
0.0
5.1
.15
.2.2
5.3
enro
llmen
t in
pre
sch
ool
-20 -15 -10 -5 0 5 10 15 20cas relative to cutoff
Preschool enrollment Enrollment school 6-15
5. Data: non parametric plots around cutoff
Log hh’ld income p.c. Log hh’ld labor income p.c
10
10.
11
0.2
10.
31
0.4
log
inco
me
pc
-20 -15 -10 -5 0 5 10 15 20cas relative to cutoff
9.6
9.8
10
10.
21
0.4
log
inco
me
pc
-20 -15 -10 -5 0 5 10 15 20cas relative to cutoff
5. Data: non parametric plots around cutoff
450
460
470
480
490
500
510
520
cas
sco
re
-20 -15 -10 -5 0 5 10 15 20cas relative to cutoff
CAS score
5. Data: some descriptive statistics Targeting (2003 CASEN): 25% CS participants
are in the bottom 5% income pc distribution, 45% are in the bottom 10% of the distribution
2/3 have no schooling or incomplete primary 70% have both head and spouse present 40% heads are married, 25% are in a union 10-13% belong to ethnic minorities ¼ have a disabled member Subjective well-being: about 40% believed that
their socio-economic situation during childhood was better, about 16% feel they do not have any social support, about ½ are aware of public programs in the community
Within the same household: subjective perceptions of the spouse are more optimistic
6. Results Time horizon: first 2 years of operation,
virtually all participants still in the intensive phase– short term impact
Unit of analysis: household Outcome space:
o Income (and income sources)o intermediate indicators key in understanding
the channels of impact (labor supply, education, health, housing, perceptions, take-up of various social programs)
Separate analysis urban/rural Separate analysis by year panel (2003,2004).
6. ResultsIncome/employmento Strong take-up of employment programs (self-
employment (30% u 14% r), public employment (4-6%), training, enrolment in local unemployment offices)
o No effect on employment outcomes (share household members who are employed). Marginal significance of share of actives in rural area), [timing issue?]
o No effect on total or labor income o Take-up of some social assistance transfers (family
allowance SUF 15% )
Housingo Take-up of housing programs in urban areas. No effect
in rural areas, even controlling for municipality effectso Participants significantly more likely to have received
help to protect household from rain, basic equipment
6. ResultsHuman capital: education• Positive effects on enrolment in pre-school (4-6%),
school enrolment 6-15 years old (7-9%)• Higher enrolment of adults in adult literacy
programs = 4-5 pct
Human capital: health• Participants more likely to be registered in the
public system (2-3%)• Higher preventive visits for children<6 (4-6%) and
women>35 (6-7%) in rural areas only
Perceptions/orientation towards the future• significant differences in awareness of local
programs, optimism about the future economic situation
Use unit-level matching estimates to explore:1. Complementarities: correlation of gains along
different dimensions (multidimensionality/comprehensiveness intervention)
optimism about the future has stronger association with
health and education improvements in rural areas, and with labor income gains in urban areas
)](),([ jT
kT YYcorr
7. Extensions: complementarities
jk
7. Extensions: observed heterogeneity2. How do gains relate to socio-economic
characteristics of the participating households, community characteristics
o Larger variance within municipalities rather than across. Same for individual effects of the social worker
o Human capital gains larger for younger households (age/life cycle)
o Income and labor effects stronger for earlier cohorts in urban areas (timing).
o Timing also matters for takeup of self-employment programs and enrollment in labor unemployment offices
o Labor gains stronger for heads with previous LF history
7. Extensions: supply side? Supply side coordination activated from 2004
onwards. o controlled for time-invariant effects at the municipality
level (rationing), thought to be more binding for a subset of programs (ex. housing projects and adult education literacy).
Suggestive evidence on implementation issues: plan to use monitoring data at the municipal level available for social workers (Unidad de Intervencion Familiar’) for internal diagnostics:
o Set of qualitative indicators about functioning social protection network (‘red local de intervencion’): responsiveness to the needs of the target population, willingness to cooperate, coordination between different institution, flexibility to adapt,
o Collected Nov. 05- Jan 06, planned to be re-administered in early 2007
8. Conclusions
The estimated gains from participating to Chile Solidario in the short run, for households in the psychosocial support phaseo Strong uptake of social programs, according
to program objectiveso Positive effects on education (preschool and
primary enrolment, adult education), and health (preventive visits children, women)
o Perceptions: improved awareness of the existence of social services, improved projection towards the future
o No estimated gains on labor supply nor income, though heterogeneity of the results seem to be supportive of the timing effect
8. Conclusions: Open questions on medium term effects
New round panel 2006 in conjunction of the CASEN: in 2006 a substantial fraction participants exited the two-years of psychosocial support
Will income gains be materialized in the future? Gains in other dimensions sustained? If so For whom? Sustainability of the joint effect and its subcomponents?
Program targeted on chronic poverty but aiming at reducing vulnerability: role program as a building block of a social protection system? (de Janvry/Sadoulet et al 2006)
8. Conclusions: Going forward
o Evidence high mobility for lower income deciles (Contreras et al, panel CASEN 1996-2001)
o Adverse consequences of uninsured shocks: main self-reported shocks that “negatively effected your household’s economic situation” in Chile are recession/loss job (30%) and sickness/cost illness (20%) Packard, 2000)
o Evidence high mobility for lower income deciles (Contreras et al, panel CASEN 1996-2001)
o Adverse consequences of uninsured shocks: main self-reported shocks that “negatively effected your household’s economic situation” in Chile are recession/loss job (30%) and sickness/cost illness (20%) Packard, 2000)
o With at least three data point can start assessing the (e.g. impact on the variance on income, beyond first moments or risk-coping ability)
8. Conclusions: Going forward New round panel 2006: Newly added survey
instruments to capture role of the psycho-social support (U. Catolica – Dept. Psicologia, U. Berkeley – School of Public Health)o ‘Autonomia’/self-efficacyo Social networks (private/public)o Orientation towards the futureo Psychological distress
Distribution CAS across regions..
300 400 500 600 700
r.m.
xii
xi
x
ix
viii
vii
vi
v
iv
iii
ii
i
Probability of participation around CAS cutoff
0
.2.4
.6.8
1C
S s
tatu
s
-50 0 50 100CAS score relative to regional cutoff
bandwidth = .05
program assignment relative to cutoff
Timing of interactions with social worker
Frequency
Contratos parciales: distribution by dimensions
Contratos parciales: within each dimension