Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach

Kline, Patrick; Tartari, Melissa

doi:10.3386/w20838

Cited by 39 publications

(56 citation statements)

References 25 publications

(45 reference statements)

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“…While the impact of the informality effects on tax collection can be informative (see for instance Bergolo and Cruces, 2014), measurement of the relevant elasticities is crucial for a full welfare analysis that quantifies the efficiency 3While AFAM's design implies a potential effect on the intensive margin of labor supply, we concentrate on the extensive margin of response. Unlike Kleven and Waseem (2013) or Kline and Tartari (2016), we are unable to measure (local) labor supply effects at the intensive margin since our data does not cover hours worked nor earnings (see Section 4). costs of social assistance programs.…”

Section: Introductionmentioning

confidence: 99%

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

Bérgolo

Cruces

2018

SSRN Journal

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The disincentive effects of social assistance programs on registered (or formal) employment are a first order policy concern in developing and middle income countries. Means tests de termine 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 -a notch -that results in a strong disincentive for formal employment, and there is extensive evidence on its effects. We study an income-tested program in Uruguay and extend this literature by developing an anatomy of the behavioral responses to this program and by establishing its welfare implications in full. Our identification strategy is based on a sharp discontinuity in the program's eligibility rule. We rely on information on the universe of applicants to the program for the period 2004-2012 (about 400,000 individuals) from the program 's records, from administrative data on registered employment from the social security administration, and from a complementary follow-up survey with information on informal work. We construct the anatomy of the program 's effects along four dimensions. First, we establish that, as predicted by the theory, beneficiaries respond to the program's incentives by reducing their levels of registered employment by about 8 percentage points. Second, we find substantial heterogeneity in these effects: 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, probably because they have limited opportunities in the labor market to begin with. Third, the follow-up survey allows us to establish that the fall in registered employment is due to a larger extent (about two thirds) to an increase in unregistered employ ment, and to a lesser extent (about one third) to a shift towards non-employment. Fourth, we find an elasticity of participation in registered employment of about 1.7. These results imply a deadweight loss from the behavioral responses to the program of about 3.2% of total registered labor income.JEL Classification: H31, I38, J22, O17.

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Section: Introductionmentioning

confidence: 99%

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

Bérgolo

Cruces

2018

SSRN Journal

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“…To mitigate the reliance on particular assumptions (e.g., on functional forms) in principle one could use revealed preference arguments to generate robust predictions from theory that are then used in design of an experiment. E.g., one could use results obtained by Pinto (2015) or Kline and Tartari (2016) to devise multiple treatment arms to test the implied restrictions. However, a model may not be necessary to enrich the experimental design to study underlying channels.…”

Section: Addressing the Issue Ex Ante Through The Design Of The Expermentioning

confidence: 99%

“…This is especially useful if the theory has explicit predictions about how the endogenous outcome responds to incentives. 35 This is pursued by Kline and Tartari (2016) However, as it is usually difficult to come by good instrumental variables, the real power of a well-designed RCT would be to manipulate sample selection directly.…”

Section: It Is Not Clear However That the Required Assumption Holdsmentioning

confidence: 99%

Social Experiments in the Labor Market

Rothstein

Wachter

2017

Handbook of Economic Field Experiments

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Large-scale social experiments were pioneered in labor economics, and are the basis for much of what we know about topics ranging from the effect of job training to incentives for job search to labor supply responses to taxation. Random assignment has provided a powerful solution to selection problems that bedevil nonexperimental research. Nevertheless, many important questions about these topics require going beyond random assignment. This applies to questions pertaining to both internal and external validity, and includes effects on endogenously observed outcomes, such as wages and hours; spillover effects; site effects; heterogeneity in treatment effects; multiple and hidden treatments; and the mechanisms producing treatment effects. In this Chapter, we review the value and limitations of randomized social experiments in the labor market, with an emphasis on these design issues and approaches to addressing them. These approaches expand the range of questions that can be answered using experiments by combining experimental variation with econometric or theoretical assumptions. We also discuss efforts to build the means of answering these types of questions into the ex ante design of experiments. Our discussion yields an overview of the expanding toolkit available to experimental researchers.

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“…Such models have a surprisingly long history: early contributions include the analysis of linear regressions with mismeasured regressors by Frisch (1934) and the analysis of Cobb-Douglas production functions by Marschak and Andrews (1944). Now, partially identified models are common in virtually all parts of economics and econometrics: measurement error (Klepper and Leamer, 1984;Horowitz and Manski, 1995), missing data (Manski, 1989(Manski, , 1994Horowitz and Manski, 1998;Manski and Tamer, 2002), industrial organization (Tamer, 2003;Haile and Tamer, 2003;Ho and Pakes, 2014;Pakes et al, 2015), finance (Hansen and Jagannathan, 1991;Hansen et al, 1995), labor economics (Blundell et al, 2007;Kline et al, 2013;Kline and Tartari, 2015), program evaluation (Manski, 1990(Manski, , 1997Manski and Pepper, 2000;Heckman and Vytlacil, 2001;Bhattacharya et al, 2008Bhattacharya et al, , 2012Shaikh and Vytlacil, 2011), and macroeconomics (Faust, 1998;Canova and De Nicolo, 2002;Uhlig, 2005). The references above are far from exhaustive and simply illustrate the widespread popularity these types of models now enjoy in economics.…”

Section: Introductionmentioning

confidence: 99%

Dual regression

Canay¹,

Shaikh

2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper surveys some of the recent literature on inference in partially identified models. Terms of use: Documents inAfter reviewing some basic concepts, including the definition of a partially identified model and the identified set, we turn our attention to the construction of confidence regions in partially identified settings. In our discussion, we emphasize the importance of requiring confidence regions to be uniformly consistent in level over relevant classes of distributions. Due to space limitations, our survey is mainly limited to the class of partially identified models in which the identified set is characterized by a finite number of moment inequalities or the closely related class of partially identified models in which the identified set is a function of a such a set. The latter class of models most commonly arise when interest focuses on a subvector of a vectorvalued parameter, whose values are limited by a finite number of moment inequalities. We then rapidly review some important parts of the broader literature on inference in partially identified models and conclude by providing some thoughts on fruitful directions for future research.

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Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach

Cited by 39 publications

References 25 publications

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

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

Social Experiments in the Labor Market

Dual regression

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