Transfer program enforcement and children’s time allocation

Abstract

We examine levels of enforcement of conditions for two transfer programs and estimate how they affect teenagers’ time allocation, and in particular, time devoted to school attendance, labor supply and home production. We develop a structural discrete choice model in which young individuals and their parents decide how to allocate their time, including whether to attend school. They also choose how many hours to work in the market, how much time to devote to home production and leisure activity. To estimate the model, we use household panel data which combines administrative records and surveys covering the period of 2005–2012 in Uruguay, during which two consecutive CCT programs were introduced with different designs. Our model captures the share of individuals who are in school, who are working, who are both studying and working, as well as those who neither study nor work; we also capture the share and number of hours devoted to market work and home production, and individuals’ GPA distribution. The policy experiments performed indicate that school attendance can be increased by raising the level of enforcement and by sending the cash transfer to the teenagers rather than to their parents.