Joint provision of income and employment support: Evidence from a crisis response in Uruguay

Abstract

Integrated approaches providing assistance to jobless individuals through the combination of income support and active labour market policies have been increasingly advocated in the policy debate, both by policy makers and international organizations. By helping people tackle immediate needs while promoting labour market reinsertion, these combined approaches are expected to improve labour market and social conditions in a sustainable manner. However, evidence on the effectiveness of this policy approach is extremely scant in emerging and developing economies. This paper studies a pivotal example of this policy trend through the evaluation of a public works programme provided alongside a cash transfer as part of a comprehensive social assistance programme that reached around 10 per cent of households in Uruguay between 2005 and 2007. We use rich administrative data of panel nature to study the effects of (i) participating in the public works programme (active component), (ii) receiving the cash transfer (income-support component), and (iii) benefiting jointly of the active and income-support programmes. Results on measures of labour market participation, employment quality, and civil society participation are non-significant across the board. Point estimates are nevertheless of the expected sign and of reasonable magnitude, suggesting that the programme came close to achieving its objective. Possible reasons of the limited effectiveness of the programme could include limited treatment intensity and lack of human capital accumulation.