Job Market Paper

Job Market Paper:

Growing Up Over the Social Safety Net: The Effects of a Cash Transfer Program on the Transition to Adulthood (In progress - regularly updated)

Abstract

Countries spend a large share of their budgets on aid to families with children, with cash transfers being one of the most used policy instruments for this purpose. This paper presents novel evidence about the effects of a permanent, large-scale, and government-implemented cash transfer program, the Uruguayan PANES/AFAM-PE. I focus on three critical dimensions of individuals’ transition to adulthood: education, fertility, and labor market decisions. I use a unique combination of individual-level administrative records that exhaustively describes the year-by-year trajectory of the effects. Using a Regression Discontinuity Design that exploits the use of a poverty score to define eligibility to participate in the program, I show that the program reduces women’s teenage pregnancies by 9.4p.p., increases participants’ early adulthood labor market participation by 6.4p.p., months worked by 4.4, and earnings by about 12%. The evidence on education outcomes is mixed but suggests a stronger attachment to the secondary education system. Consistent with a postponement of women’s first birth being the main driver, changes in labor market outcomes are observed exclusively for women. The evidence suggests that cash transfers may be viable policies to improve children’s future life trajectories and contribute to reducing the labor market gender gap.