Evidence of eligibility manipulation for conditional cash transfer programs

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EconomiA15(2014)243–260

Evidence

of

eligibility

manipulation

for

conditional

cash

transfer

programs

Sergio

Firpo

a,b

,

Renan

Pieri

a

,

Euclides

Pedroso

Jr.

c

,

André

Portela

Souza

a,∗ a_C-Micro_–_FGV,_Escola_de_Economia_de_São_Paulo_(EESP)_–_FGV,_Brazil

b_IZA,_Germany

c_Escola_de_Economia_de_São_Paulo_(EESP)_–_FGV,_Brazil

Received29January2014;receivedinrevisedform1August2014;accepted2September2014 Availableonline17October2014

Abstract

Thispaperassesseswhethereligibilityforconditionalcashtransferprogramshasbeenmanipulated,aswellastheimpactof thisphenomenonontimeallocationwithinhouseholds.Toperformthisanalysis,weusedatafromthe 2006PNAD(Brazilian nationalhouseholdsurvey)andinvestigatetheeligibilitymanipulationfortheBolsaFamília(FamilyStipend)programduringthis timeperiod.TheprogramassistsfamilieswithamonthlypercapitaincomeofaroundR$120.00(US$60.00).Byapplyingthetests developedbyMcCrary(2008),wefindsuggestiveevidencethatindividualsmanipulatetheirincomebyvoluntarilyreducingtheir laborsupplyinordertobecomeeligibletotheprogram.Moreover,thereductioninlaborsupplyisgreateramongwomen,especially singleordivorcedmothers.Thisevidenceraisessomeconcernabouttheunintendedconsequencesrelatedtotheeligibilitycriteria utilizedbyBolsaFamília,aswellastheprogram’simpactonindividualslivinginextremepoverty.

JELclassiﬁcation: I38;O15

Keywords: Conditionalcashtransfers;BrazilianBolsaFamília;Regressiondiscontinuity;Eligibilitymanipulation

Resumo

Oartigoinvestigaamanipulaçãoparaaelegibilidadedeprogramadetransferênciacondicionalderendabemcomoseessa manipulaçãosedáatravésdemudançasdaalocaçãodotempodosmembrosdafamília.Paratanto,eleutilizaosdadosdaPesquisaPor AmostragemDomiciliar2006(PNAD/IBGE)noBrasileinvestigaaamanipulaçãoparaelegibilidadenoBolsaFamília.Oprograma sedirigeafamíliascomrendapercapitafamiliarinferioraR$120(US$60.00)mensais.utilizando-seostestesdesenvolvidospor McCrary(2008),seencontramevidênciassugestivasqueindivíduosmanipulamsuasrendasreduzindovoluntariamentesuaoferta

∗_{Corresponding}_author_at:_Sao_Paulo_School_of_Economics,_Getulio_Vargas_Foundation,_Rua_Itapeva_474,₁₂_andar,_sala_1205,_01332-000_Sao

Paulo,SP,Brazil.Tel.:+551137993358.

E-mailaddress:[email protected](A.P.Souza).

PeerreviewunderresponsibilityofNationalAssociationofPostgraduateCentersinEconomics,ANPEC. http://dx.doi.org/10.1016/j.econ.2014.09.001

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detrabalho.estareduc¸ãoémaiorentreasmulheressolteirasechefesdefamília.Estasevidênciaslevantamalgumaspreocupac¸ões sobreasconsequênciasnãointencionaisdoscritériosdeelegibilidadedoBolsaFamíliaedosseusimpactossobreapobrezaebem estardasfamílias.

Palavraschaves: TransferênciasCondicionaisdeRenda;BolsaFamília;RegressãocomDescontinuidade;Manipulac¸ãodeElegibilidade

1. Introduction

BrazilisacountryknowntohaveahighlevelofincomeinequalitywithaGinicoefficientofpercapitahousehold incomeofapproximately0.54(IPEADATA,2013).Asidefromthisfactor,Brazilalsohassignificantlevelsofboth povertyandextremepoverty.In2009,about21.4%and7.3%ofthepopulationwaspoorandextremelypoor,respectively (IPEADATA,2013).

Inordertohelpcombatthispoverty,aconditional cashtransferprogram– the BolsaFamíliaProgram (PBF)1

–wascreatedin2004.Thegoalofthe programwastoincreasetheincomelevelof economicallyunderprivileged subpopulations,as wellasgeneratedirectincentivesfor childrentoimprove theireducation andhealthoutcomes. By2013,therewerearound 14millionfamilies participatinginthe program,encompassingmorethan50million individuals.Thetotalvalueofthe cashtransfersreachedmorethan0.5%oftheBrazilianGrossDomestic Product (GDP).

AccordingtoFoguelandUlyssea(2007),publictransfershaveaccountedforthemajorsourceofnon-workrelated incomeinthepastfewyears.Somestudies,suchasthosebydeBarrosetal.(2007a,b,c),Hoffmann(2006),Soares etal.(2006),andCuryetal.(2009),find thatthe PBFhashadapositiveimpactPBFonthereduction ofincome inequalityandpovertyinBrazil.FerroandKassouf(2003),CardosoandSouza(2004),Bourguignonetal.(2004), andGlewweandKassouf(2012)notethepositiveeffectthatconditionalcashtransferprogramshaveonincreasing theschoolattendanceofchildrenwhosefamiliesarebeneficiaries.However,thereisnoevidenceofpositiveimpact onvaccination(CEDEPLAR,2007).

However,sincepercapitahouseholdincomeisoneoftheeligibilitycriteriaforthePBF,theprogrammayhave adverseeffects onagents’ laborsupply.Forexample,individuals withincomes slightlyhigherthanthemaximum levelforparticipationintheprogramwouldbeencouragedtoreducetheirlaborsupplyinordertomeettheeligibility criteria.

Manipulationofincomemayshiftthefocusawayfromthesubpopulationofinterest,forwhichthebenefitisbadly needed.Datafor2012showthattherewere16.2millionpeopleinBrazilwithamonthlyincomepercapitalessthan R$70.00,whichistheextremepovertyline(WorldBank,2013).Hence,ifnon-eligibleindividualsbenefitfromthe program,thosemostinneedarelikelytobeexcludedfromthePBFasthebudgetbecomeslargerthanexpected.

Theaimofthispaperistoascertainpossiblemanipulationintheeligibilitystatusforthe PBFandverify ifthe manipulationisperformedbybehavioralchangesonthetimeallocationoftheindividualswithinthehouseholds.This manipulationisassessedbythetestdevelopedbyMcCrary(2008),whichdeterminesthepresenceofdiscontinuityin thedensityestimatedbylocallinearregressionsaroundthecutoffthatdefinestheeligibilityfortheprogram,which wasR$120.00(US$60.00)intermsofmonthlypercapitahouseholdincomein2006.Next,weuseafuzzyregression discontinuitydesigninordertoobtainevidencesoftheeligibilitymanipulationbychangesontimeallocation.

The paper contributes to the public debate of social policy design. Particularly, there is a debate whether the targetingofsocialprogramsshouldbemeanstestedorproxy-meanstested.Ameanstestedtargetingstrategyimplies thathouseholdwithincomebelowcertainthresholdsqualifytotheprogram.ThisisthecaseofBolsaFamiliaprogram. Onthe otherhand,aproxy-means testedstrategy makesprogrameligibility todependon acomposite scoreofa household’s characteristicsuch as asset holdings, demographic composition,anddwelling characteristics that are proxiesforhouseholdincome.ThisisthecaseoftheOportunidadesprograminMexico.

Theadvantage of themeans-tested targetingstrategyis itssimplicityandlow cost(less informationcollection required,easinesstocompute, etc.).Itsdrawback isthat it mayincreasethe probabilityof including non-eligible

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familiesbecausehouseholdmaylieabouttheirtrueincome.Ontheotherhand,theproxy-meanstestingdecreasesthe chancesofinclusionerrorbecausehousehold’sassetholdingsandothercharacteristicsaremoredifficulttomanipulate. However,thedisadvantageisthatitmayincreasethechanceofexclusionerror.Theprogrammaynotreactproperly incaseoffamiliesthatsufferanegativeincomeshockandbecomeeligibletotheprogram.

Althoughthisisanimportantdebate,thereisscantevidenceontheadvantagesordisadvantagesofeachstrategy. Thispapersheds newlight tothisdebatebyshowing thatmeans-testedtargetingleadstoinclusionerror,because householdschangetheirbehaviorinordertobecomeeligibletotheprogram.2

Includingthisintroduction,thepaperisorganizedintosixsections.Section2describesthemaincharacteristicsof thePBFandtheincentivesassociatedwithparticipation.Theconstructionofthedatabaseandthesampleselectedare notedinSection3.Section4describesthemethodology.ResultsarepresentedinSection5,whileSection6offersour conclusions.

2. TheBolsaFamíliaProgram

ThePBFisaconditionalcashtransferprogramofficiallylaunchedbytheBrazilianfederalgovernmentin2004. Itconsistedof amergerof severalexistingsocialprograms,such asthe cookinggassubsidy,the NationalSchool AllowanceProgram,theFoodCardProgram,theFoodAllowanceProgram,andtheChildLaborEradicationProgram.3 Inthissection,thedescriptionofthePBFrelatesto2006becausethedatausedinthisstudywereobtainedfromthe 2006PNAD(Braziliannationalhouseholdsurvey).Inthatyear,thesupplementofthesurveycollectedinformation abouttheconditionalcashtransferprograms.4

In2006,ahouseholdneededtohaveamonthlypercapitahouseholdincomeequalorbelowtoR$120.00toqualify for thePBF.“Poor” families,definedas thosewithamonthlypercapitahousehold incomebetweenR$60.00and R$120.00,wereeligibleiftheyhadchildrenyoungerthan15yearsofage,oriffamilymembersincludedpregnant womenorbreastfeedingmothers.Ifthesefactorsexisted,thefamilywouldreceiveavariabletransferofR$15.00for eachchild(orpregnantwomanorbreastfeedingmother),restrictedtoamaximumofthreetransfersperhousehold.For casesinwhichthemonthlyhouseholdincomewaslowerthanR$60.00,thefamilieswereclassifiedas“extremelypoor” andreceivedabasictransferofR$50.00,eveniftherewerenochildren,pregnantwomenorbreastfeedingmothersin thehousehold.Inaddition,thesefamiliescouldreceiveavariabletransferofR$15.00perbeneficiary(nottoexceed threebeneficiaries).

InordertoqualifyfortheR$15.00variablecashtransfer,householdsneededtomeetthefollowingrequirements: • Childrenaged6–15yearsoldhadtobeenrolledinschoolandhaveaschoolattendancerateofatleast85%. • Pregnantwomenandbreastfeedingmotherswererequiredtoattendprenatalandpostnatalvisits,accordingtothe

timetableestablishedbytheBrazilianMinistryofHealth.

• Childrenuptosevenyearsofagehadtobeup-to-datewiththerecommendedvaccineschedule.

Familiesfailingtomeettheserequirementsweresubjecttogradualpenalties,includingnotification,cancellation ofthecashtransfer,andexclusionfromtheprogram.Nevertheless,noseverepenaltiesexistformanipulatingincome information.Incomeverificationforparticipationintheprogramdependsontheinstitutionalframeworkofeachregion, andthisdataisseriouslycompromisedbythefactthatalargenumberofbeneficiariesholdinformaljobcontracts.

Withtheseimposedrequirements,itisreasonabletoassumethatviolationslinkedtomandatoryschoolattendance arethemostlikelytoincurseverepenalties.Inaddition,theMinistryofSocialDevelopment(MDS),whichmanages thePBF,reliesonthestateandmunicipalpubliceducationsystemstocheckwhethertherequirementsareproperly satisfied.

TheeffectsonlaborsupplyofprogramssimilartothePBFhavebeenaddressedbycomprehensivestudies,chiefly intheUnitedStatesandintheUnitedKingdom(e.g.,Moffitt,1992;BlundellandMacurdy,1999;Eissaetal.,2006).

2 _The_authors_would_like_to_thank_an_anonymous_referee_for_highlighting_this_point.

3 _The_program_is_pursuant_to_law_10.836,_as_of_January_9,_2004,_and_is_currently_managed_by_the_Brazilian_Ministry_of_Social_Development_and

HungerEradication.

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Thereare a sizeablenumber of empirical studiesfocusing ondisincentives tolaborforce participationdueto conditionalcashtransferprogramsadoptedbydevelopingcountries.However,thefindingsare notconclusive.For instance,ParkerandSkoufias(2000)andSkoufiasanddiMaro(2006)investigatedtheMexicanprogramOportunidades

anddidnotfinddisincentivestocontributingtothelaborsupplyamongadultworkers.Likewise,EdmondsandSchady (2008)alsosuggestthatEcuador’sBonodeDesarrolloHumano(BDH)programdidnotproduceeffectsontherateof participationofadultindividualsinthelabormarket.Ontheothersideofthespectrum,MaluccioandFlores(2005) showedthatNicaragua’sReddeProtecciónSocial(RPS)programsignificantlyreducedhoursworkedamongadult maleworkers,butnotamongadultfemaleworkers.

Recently,severalstudieshavesoughttodeterminetheeffectsofthePBFandotherconditionalcashtransferprograms onadultlaborsupplyinBrazil(e.g.,Soaresetal.,2007;FerroandNicollela,2007;Tavares,2008;Teixeira,2008;Covre etal.,2008;FoguelanddeBarros,2008).Ingeneral,theseanalysesontheadverseincentivesrelatedtoconditional cashtransferprogramshavealsoledtodistinctconclusions.Thesestudiesusedifferentempiricalstrategiestocompare allbeneficiariesagainstobservationallysimilarnon-beneficiaries.Theprogramhasasetofincentivesthatcanaffect theadultlaborsupplyinopposingdirections.Ononehand,theincometransfermayleadtoadecreaseinlaborsupplyif leisureisanormalgood.Ontheotherhand,theconditionalitiesrelatedtothetimeallocationofchildrenandadolescents maychangeadulttimeallocation,whichmayincreasethisgroup’slaborsupply.Thusfar,theempiricalstudiesestimate theneteffectofthesedifferentchannels.

Ourpresentstudycontributestotheliteratureintwoways.Firstly,wefindevidencethatindicatesincomeeligibility manipulationforaconditionalcashtransferprogram.Secondly,ourstudyshowsthatthismanipulationoccurs(inpart) throughadecreaseinthelaborsupplyofadultmembersforthosefamiliesonthemarginofqualifyingforthePBF.

3. Datasetandsampleselection

ThedatausedinthepresentstudywereobtainedfromtheBraziliannationalhouseholdsurvey(PNAD)conducted in2006.TheBrazilianInstitute ofGeography andStatistics(IBGE)conducts thePNAD onan annualbasis.The surveycoversallregionsof Brazil(exceptforsomeruralareas). Around75,000households(300,000individuals)

are interviewed.The PNADgeneral questionnaire collectsinformationabout social,demographic, andeconomic

characteristicsoftheindividualsandhouseholds.

Foreachyear,thereisaspecificquestionnaire,asidefromthegeneralone,thatgathersinformationaboutaspecific topicorissue.The2006PNADisespeciallyusefulinidentifyingwhichhouseholdshadatleastonePBFbeneficiary. However,thePNADdoesnothaveaspecificvariabletoassessthecashtransfersanindividualreceivesfromsocial programs.CashtransfersfromtheseprogramsareincludedintheV1273variable,alongwiththeinterestgenerated fromsavingsaccountsandotherfinancialapplications,dividends,andotherrevenues.

InordertoobtainthevalueexclusivelycomprisedofPBFtransfers,basedontheV1273variable,weusethefiltering procedureshowninFig.1.ThismodelcloselyfollowstheprocedureusedbydeBarrosetal.(2007c).

WiththisprocedureweareabletoconstructthevalueofthePBFcashtransferbyhousehold.Followingthis,we constructthevariablemonthlynethouseholdincomepercapitaofthePBFcashtransfer.

Weusedifferentsamplesofindividualsandclassifythemintotwogroupstocheckforheterogeneitiesintheincome manipulationtests5:

• Familygroup“1”:membersofhouseholdsmadeupofcoupleswithatleastonechildyoungerthan15yearsofage. • Familygroup“2”:membersofhouseholdsconsistingofmotherashouseholdhead,withatleastonechildyounger

than15yearsofage.

Basedonthehouseholdprofile,inordertocapturethepossibleheterogeneouseffectsofthePBFonlaborsupply, thesubsampleswerestratifiedintoanothertwogroups:

• Demographicgroup“A1”:men(householdheads)belongingtofamilygroup“1”.

5 _The_selection_of_households_with_at_least_one_child_younger_than₁₅_years_of_age_is_justified_by_the_criterion_that_makes_poor_people_eligible_for

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Fig.1.FilteringprocedureforcalculationofthePBFvalue.Notes:MW⇒minimumwageinSeptember2006usedasreference(R$260.00).Values equalto,oramultipleof,constantMWintheV1273variableareattributedtocashtransferfromtheContinuousCashBenefit(BPC)program,as isexplainedindeBarrosetal.(2007c);TypicalValues=TypicalvaluesofPBFandcorrelates,aswellastheircombinations,asillustratedinTable 6indeBarrosetal.(2007c).Valuescloseto“TypicalValues”(±R$5.00)wereconsideredinordertomakeupforpossibleincorrectinformation providedbytherespondent.

• Demographicgroup“B1”:women(mothers)belongingtofamilygroup“1”.

• Demographicgroup“B2”:women(mothers)belongingtofamilygroup“2”.

Weperformourempiricalanalysisseparatelyforeachdemographicgroup.Thedescriptivestatisticsofthesamples arepresentedinTable1.

InTable1,the descriptivestatistics forfamilygroups“1”and“2”are presentedtogether,aswellasseparately. Withinagroup,thestatisticsarepresentedseparatelyforbeneficiariesandnon-beneficiaries.Theaveragemonthlyper capitahouseholdincomeofPBFbeneficiaries,discountedfromthecashtransfervaluesforthewholesample,isquite closetotheeligibilitycriterion(R$120.00).Forfamilygroup“1,”theaveragemonthlypercapitahouseholdincome isslightlygreater(1.2%)thanthecutoffpoint,whereasforfamilygroup“2,”thatfigureis7.6%lowerthanthecutoff point.

ItisimportanttonotethattheaveragenumberofchildrenislargerforPBFbeneficiariesandthatthegeographical distributionbetweenthetwogroupsisdifferent,sinceapproximately50%of beneficiariesliveinthenortheast,in contrasttonon-beneficiaries.Non-whiteindividualsaretheoverwhelmingmajorityamongbeneficiaries.

Table2describesthecharacteristicsofthehouseholdmembersineachgroup.Employmentratesandtheaverage

numberofweeklyhours workedamongPBFbeneficiariesarehigherfor groupA1(men)andlowerforgroupB1

(married women).Ontheotherhand,theparticipationrate isverysimilarbetweenmarried malebeneficiariesand non-beneficiaries.Thebeneficiariesbelongingtothegroupofmarriedmothersaretheyoungest.Singleorindependent mothers,however,havehigheraverageschoolinglevels.

Table3showsthetargetingabilityofthePBFaccordingtotheincomeeligibilitycriterionbyfamilygroups.A familyis consideredeligibleifmonthlyper capitahouseholdincome isless thanorequal toR$120.00.The PBF indicatorvariableis equaltooneifthefamilydeclarestohaveaPBFbeneficiaryinthefamily.It isimportantto notethatthetargetingisimperfect.Asignificantnumberof PBFbeneficiariesdidnotmeettheeligibilitycriterion andarestillincludedintheprogram.Inotherwords,theirincomeisgreaterthanR$120.00,buttheystillreceivethe benefit.AssumingthePNADinformationaboutincomeisaccurateraisesthequestionofwhetherindividualsmight bemanipulatingtheirincomeinformationinordertoqualifyfortheprogram.Inthiscase,assessmentsofthePBF’s

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Table1

Descriptivestatisticsoffamilygroups.

Variables Familygroups“1”+“2” Familygroup“1” Familygroup“2”

PBF=1 PBF=0 PBF=1 PBF=0 PBF=1 PBF=0

Observations 10,796 34,767 9184 30,299 1612 4468

(A)Householdcharacteristics

Monthlyhouseholdincomepercapita(Avg.,inR$)

WithTransfera _134.68 _453.20 _135.59 _464.71 _129.48 _375.12

WithoutTransfer 119.90 453.20 121.48 464.71 110.87 375.12

Numberofchildren(Avg.)

Total 2.7 2.0 2.7 2.0 2.6 2.0 <15years 2.3 1.7 2.3 1.7 2.1 1.5 Region North 1427 4566 1243 4012 184 554 (13.2%) (13.1%) (13.5%) (13.2%) (11.4%) (12.4%) Northeast 5626 8389 4879 7251 747 1138 (52.1%) (24.1%) (53.1%) (23.9%) (46.3%) (25.5%) Southeast 2064 10,935 1691 9545 373 1390 (19.1%) (31.5%) (18.4%) (31.5%) (23.1%) (31.1%) South 994 6331 800 5535 194 796 (9.2%) (18.2%) (8.7%) (18.3%) (12.0%) (17.8%) CentralWest 685 4546 571 3956 114 590 (6.3%) (13.1%) (6.2%) (13.1%) (7.1%) (13.2%)

(B)Characteristicsofhouseholdheads Sex Male 8526 27,883 8526 27,883 0 0 (79.0%) (80.2%) (92.8%) (92.0%) (0.0%) (0.0%) Female 2270 6884 658 2416 1612 4468 (21.0%) (19.8%) (7.2%) (8.0%) (100.0%) (100.0%) Race White 3274 17,223 2789 15,115 485 2108 (30.3%) (49.5%) (30.4%) (49.9%) (30.1%) (47.2%) Other 7522 17,544 6395 15,184 1127 2360 (69.7%) (50.5%) (69.6%) (50.1%) (69.9%) (52.8%)

Yearsofschooling(Avg.) 4.3 7.8 4.1 7.7 5.1 8.0

Age(Avg.) 38.2 37.8 38.3 37.7 37.3 38.0

Source:PNAD/IBGE(2006).

Familygroup“1”:familiesmadeupofcoupleswithatleastonechildyoungerthan15yearsofage.

Familygroup“2”:familiesmadeupofmother(householdhead)withatleastonechildyoungerthan15yearsofage.

a _“With_Transfer”_designates_families_that_received_the_extra_payment_because_of_the_number_of_children_eligible_for_the_program.

impactPBFonoutcomesreliedonthevariationofparticipationintheprogram,basedonthediscontinuityofarunning variablethatdeterminestheeligibilitycriterionwilllikelybebiased.

Fig.2showsthekerneldensityfunctionsforthemonthlynethouseholdincomepercapitaofthePBFtransfersin 2006.First,theaverageincomeofrecipientsisbelowtheincomecutoffforeligibility(R$120.00).Anotherimportant characteristicofrecipienthouseholdsistheexistenceofalargerconcentrationofobservationsbelowthecutoffvalue, comparedtothedistributionofnon-recipients.Despitethegreaterproportionofbeneficiariesamongpoorfamilies, thereareanon-negligiblenumberofPBFparticipantswhosemonthlypercapitahouseholdincomeishigherthanthe cutoffvalue.Thesecharacteristicsraisetwopossibilities:

a) Thefocusoftheprogramwasappropriateasthemeanoftheaveragepercapitahouseholdincome,discountedfrom thecashtransfers,ismuchlowerthantheeligibilitycutoff.

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Table2

Descriptivestatisticsoffamilygroupmembers.

Variables DemographicgroupA1 DemographicgroupB1 DemographicgroupB2

PBF=1 PBF=0 PBF=1 PBF=0 PBF=1 PBF=0

Observations 9184 30,299 9184 30,299 1612 4468

(A)Characteristicsofindividuals

Laborforceparticipationrate 95.4% 95.8% 61.6% 64.6% 78.2% 82.9%

Employmentrate 91.5% 93.1% 55.6% 58.6% 68.9% 75.9%

Hoursworkedifemployed(Avg.) 45.7 46.9 28.5 36.2 35.6 39.9

Yearsofschooling(Avg.) 4.1 7.7 4.8 8.2 5.1 8.0

Age(Avg.) 38.6 37.9 34.1 33.9 37.3 38.0 Race White 2777 15,088 2816 15,493 485 2108 (15.5%) (84.5%) (15.4%) (84.6%) (18.7%) (81.3%) Other 6407 15,211 6368 14,806 1127 2360 (29.6%) (70.4%) (30.1%) (69.9%) (32.3%) (67.7%) (B)Householdcharacteristics

Monthlyhouseholdincomepercapita(Avg.,inR$)

WithTransfer 135.59 464.71 135.59 464.71 129.48 375.12

WithoutTransfer 121.48 464.71 121.48 464.71 110.87 375.12

Numberofchildren(Avg.)

Total 2.7 2.0 2.7 2.0 2.7 2.0 <15years 2.3 1.7 2.3 1.7 2.3 1.7 Region North 1243 4012 1243 4012 184 554 (23.7%) (76.3%) (23.7%) (76.3%) (24.9%) (75.1%) Northeast 4879 7251 4879 7251 747 1138 (40.2%) (59.8%) (40.2%) (59.8%) (39.6%) (60.4%) Southeast 1691 9545 1691 9545 373 1390 (15.0%) (85.0%) (15.0%) (85.0%) (21.2%) (78.8%) South 800 5535 800 5535 194 796 (12.6%) (87.4%) (12.6%) (87.4%) (19.6%) (80.4%) CentralWest 571 3956 571 3956 114 590 (12.6%) (87.4%) (12.6%) (87.4%) (16.2%) (83.8%) Source:PNAD/IBGE(2006).

Demographicgroup“A1”:men(householdheads)belongingtofamilygroup“1”. Demographicgroup“B1”:women(marriedmothers)belongingtofamilygroup“1”. Demographicgroup“B2”:women(singlemothers)belongingtofamilygroup“2”.

Table3

FrequencyofPBFbeneficiariesandnon-beneficiariesaccordingtotheeligibilitycriterion(cutoff=R$120.00).

Beneficiaries Eligibility

Familygroups“1”+“2” Familygroup“1” Familygroup“2”

Di=1 Di=0 Di=1 Di=0 Di=1 Di=0

PBF=1 6701 4095 5671 3513 1030 582

PBF=0 6810 27,957 5,741 24,558 1069 3399

Total 13,511 32,052 11,412 28,071 2099 3981

Source:PNAD/IBGE(2006).

EligibleifmonthlyhouseholdincomepercapitaislessthanorequaltoR$120.00.Ineligible,otherwise. Familygroup“1”:familiesmadeupofcoupleswithatleastonechildyoungerthan15yearsofage.

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0 .00 2 .00 4 .00 6 Densit y 0 60 120 180 240 300 360 420 Monthly Income Per Capita (in Reais)

Non-benefited families Benefited families

Fig.2.Kerneldensityofmonthlyhouseholdincomepercapita,2006.

b) Thehouseholdincomecriterionencouragespeopletobehaveopportunisticallyandcreatesaclassicalmoralhazard situation.Somepeopleonthemarginofthethresholdvoluntarilyreducetheirlabormarketparticipationortheir workinghoursinordertobecomeeligiblefortheprogram.

4. Methodology

4.1. McCrary’stest

McCrary(2008)suggeststhatifthere isadiscontinuity inthedensityof therunning variableattheprogram’s eligibilitythreshold,thismayimplythatsomeagentswereabletoperfectlymanipulatetheirtreatmentstatus.Inour case,thisphenomenonmeansthatthe allocationof thehouseholdfromonesideofthe cutoffpointtotheotheris manipulated.Thisisdonebyparticipantseitheralteringtheirhouseholdincomeorbyomittinginformationaboutitto thepolicymaker.

WeusethedensitytestproposedbyMcCrary(2008)tocheckwhetherthereisevidenceofdiscontinuityinthe densityofthemonthlypercapitahouseholdincomeatthecutoffvaluefortheeligibilitycriterion.Thisprocedureisa locallineardensityestimatorperformedintwostages:thefirststepestimatesapercapitahouseholdincomehistogram, whilethesecondphasesmoothensthehistogramoneachsideofthecutoffpointusingalocallinearregression.Since itisatestoftheexistenceofdiscontinuityinthedensity,theestimationusestheentiredistributionofthemonthly percapitahouseholdincome.Afterthiscomputation,aWaldestimatorisusedtotestthenullhypothesisofwhether discontinuityisequaltozeroaroundthecutoff.

4.2. Regressiondiscontinuitydesign

Inordertofurtherinvestigatewhetherindividualsmanipulatetheireligibilitystatusbychangingtheirincomethrough laborsupplydecisions,weevaluatetheeffectofbeingqualifiedforthePBFonaseriesofindividualoutcomes.We estimatethefollowingtypeofregression:

yi=α+βDi+g(Ri)+θXi+ui, i=1,...,n (1) whereg(Ri)=ψ00+ J j=1ψ1j(Ri− ¯R)j+ J j=1γj(Ri− ¯R)jDi.

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Eq.(1)specifiestherelationshipofanoutcomevariableyiandtheindicatorvariableDi=1[Ri ≤ ¯R]ofprogram

eligibility,g(Ri)andadditionalcontrolsXi.Theoutcomesofinterestare:anindicatorvariable,ofPBFparticipation;an

indicatorvariableoflabormarketparticipation;anindicatorvariable,iftheindividualisworkinginthelabormarket; andthenumberofweeklyhoursworkedinthelabormarket.TheindicatorvariableDiassumesavalueequalsoneif

theindividualexanteincomeRiisequalorbelowthethresholdvalue ¯Roftheeligibilitycriterionforparticipationin

thePBF.Thefunctiong(Ri)isapolynomialbasedontheindividualexanteincomecenteredatthecutoffgivenbythe

eligibilitycriterion.Xiisavectorofadditionalcontrolsandincludesregiondummies,sectorofactivity,race,age,age

squared,yearsofschooling,andadummyvariableindicatingwhetheranindividualholdsaformaljob.

Thecoefficientofinterestisβ.Thistermmeasuresthedifferenceintheoutcomebetweenanindividuallocatedright belowthecutoffpoint ¯R andanindividualimmediatelyabovethisthreshold.Twopointsareworthemphasizinghere. First,wetestparametricallyiftherearediscontinuitiesaroundtheeligibilitycut-offcriterionforprogramparticipation andlaborsupplyoutcomesseparately.Sincebeingbeloworabovethecut-offdoesnotperfectlypredictparticipation, werefertotheseestimationsas“fuzzy”regressiondiscontinuityestimators.

Second,forthisexercisewedonotperformaWaldestimatorusingaclassicalfuzzyregressiondiscontinuitydesign wheretheindicatorvariableofprogrameligibilityservesasexcludedinstrumentinafirststageregressionofprogram participation. Thereasons arethat the instrumentmaynot beexogenousandwe ratherwanttoknow ifthereare suggestiveevidencesthattheprogramparticipationismanipulatedbylaborsupplyresponses.

5. Results

5.1. Manipulationtests

Figs.3–5showthedensityofmonthlyhouseholdpercapitaincomenetofthetransfervaluesreceivedbybeneficiaries. Fig.3representsthedensityforfamilygroups“1”and“2”jointly,andFigs.4and5illustratetheindividualdensitiesfor familygroups“1”and“2”respectively.Allofthefigureshavesignificantdiscontinuityaroundtheeligibilitycriterion ofR$120.00.ItisimportanttonotethatthedensityofthesampleisincreasingfromhavingzeroincometoR$120.00. ThedensityisalsodecreasingtotherightfromthecutoffofR$120.00.

Additionally, we perform the McCrary density tests for different cutoff values. The results are presented in Figs.6 and7.Weestimated householdincomedensityfunctionswithcutoff pointsofR$150.00andR$140.00for

0 .00 5 .01 .01 5 Densi ty 0 120 240 360 480 600 720 840 960 Monthly Income Per Capita (in Reais)

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Fig.4.NormalizeddensityofthePBFeligibilityvariable–cutoff=R$120.00(familygroup“1”).

0 .00 2 .00 4 .00 6 .00 8 .01 Densi ty 0 120 240 360 480 600 720 840 960 Monthly Income Per Capita (in Reais)

familygroups“1”and“2”respectively.Thesetwofiguresindicatethatthedensitiesontherightandleftsidesofthe cutoffpointsaresimilar.

WealsoperformtheMcCrarytestforthedistributionofthelogarithmofincome.Inthiscase,wedropallobservations withzeroincome.Table4showsthediscontinuityestimatesinlogarithmofhouseholdincomepercapita,according tothe locallinear densityestimatorproposed byMcCrary (2008).Thereare discontinuities for allfamilygroups aroundthecutoffofR$120.00.Thedensityislowerimmediatelyafterthethresholdandthedifferenceisstatistically significant.

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0 .00 5 .01 .01 5 Densi ty 0 150 300 450 600 750 900 1050 Monthly Income Per Capita (in Reais)

0 .00 2 .00 4 .00 6 .00 8 .01 Densi ty 0 140 280 420 560 700 840 980 Monthly Income Per Capita (in Reais)

WealsoperformtheMcCrarytestfordifferentcutoffpoints.ThevalueofthesecutoffpointsincludeR$130.00, R$140.00, andR$150.00. We find somediscontinuities for thesethreshold valuesas well. They are significantly differentfromzerofortheR$130.00andR$140.00cutoffsforfamilygroup“1”andthewholesample.However,the discontinuityisnolongersignificantlydifferentfromzeroatthecutoffvalueofR$150.00.Discontinuitiesatother cutoffvaluesmaybeduetothefactthatourmeasureofincomeisimperfect.Theactualthresholdusedbythepolicy makerismorelikelytobearoundourR$120.00value.

Finally,Figs.8and9showrobustnesschecksthatwerecarriedout.Thesetestsdeterminewhetherthisdiscontinuity isduetotheincentivesprovidedbytheprogram,orwhetheritisasystematiccharacteristicoftheBrazilianincome

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Table4

Discontinuityestimators(inlog)forseveralcutoffpoints.

Cutoffs Wholesample Familygroup“1” Familygroup“2”

R$120.00 −0.217** _−0.228** _−0.135* (0.020) (0.021) (0.055) R$130.00 −0.235** _−0.265** _−0.077 (0.020) (0.021) (0.056) R$140.00 −0.211** _−0.239** _−0.030 (0.020) (0.022) (0.057) R$150.00 −0.015 −0.075 −0.031 (0.022) (0.231) (0.061) N 10,796 9184 1612

Standarderrorsinparentheses.

Valuescalculatedbasedonthelocaldiscontinuityestimator(McCrary,2008).

* _p-Value_<0.05. ** _p-Value_<0.01. 0 .00 5 .01 .01 5 Densi ty 0 120 240 360 480 600 720 840 960 Monthly Income Per Capita (in Reais)

Discontinuity estimation: 0.079113556 (0.25120635)

Fig.8.Normalizeddensityofhouseholdincomepercapita(PNAD1998).

distributionthatexistsindependentlyfromthePBF.Thedistributionofhouseholdincomewasplottedfor1998and 1999,yearsduringwhichthePBFdidnotexist.Sincenodiscontinuityisobservedintheseyears,itislikelythatthe jumpsobservedin2006arerelatedtothePBF.

Overall,theseresultssuggestthatagentsdeliberatelyreducetheirincomes,orreportthemincorrectlytothepolicy makerinordertobeeligiblefortheprogram.

5.2. Eligibilitycriterionandprogramparticipation

Wenext checkto determine if individuals that are eligible for the PBF, based on the methodology described previously,areinfactmorelikelytoparticipateintheprogram.Foralexercisesweusetheentiredistribution.Table5 presentsthe resultsfor theestimations of Eq.(1),whereg(Ri) isspecified inquadraticform.Theregressions are

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Discontinuity Estimation: 0.068954586 (.076038716)

Fig.9.Normalizeddensityofhouseholdincomepercapita(PNAD1999).

The resultsof Table 5show that individualsimmediately belowthe thresholdare morelikelytoparticipate in thePBF.ThereisdiscontinuityintheprobabilityofparticipatinginthePBFaroundthethresholdofR$120.00for individualsbelongingtobothfamilygroups“1”and“2.” Resultsindicatethatindividualsinfamilygroup“1”and “2”whoaredirectlybelowthecutoffare,respectively,11.82and12.41percentagepointsmorelikelytoparticipatein thePBFcomparedtoindividualsimmediatelyabovethisvalue.Wedonotfinddiscontinuitiesforothercutoffvalues, exceptforfamilygroup“1”individualsaroundthecutoffvalueofR$140.00.

Finally,inordertocheckrobustnessofTable5results,weperformedthesameexerciseforsubsamplescomposed byfamilieswithdifferentrangesofexantemonthlyhouseholdpercapitaincomevalues.Weselectedthreesubsample withfamilieswithincomebelow400reals,500realsand600reals,respectively.Thecut-offusedisR$120,00andthe resultsarepresentedinTableA.1.TheyarequalitativelysimilartotheonesinTable5.Thepointestimatesarelower (around0.3)butpositiveandsignificantforfamilygroup1.Thepointestimatesarealsoaround0.3forfamilygroup 2butnolongerstatisticallydifferentfromzero.Thismayduetothefactthatthesamplesizeisgreatlyreduced.

Table5

RDestimates:probabilityofahouseholdparticipatinginthePBF.

Coefficients Description Familygroup“1” Familygroup“2”

Cutoff =R$120.00 Cutoff =R$140.00 Cutoff =R$150.00 Cutoff =R$120.00 Cutoff =R$140.00 Cutoff =R$150.00 β Eligibility(D) 0.1181*** _0.1066*** _0.0717 _0.1241*** _0.0692 _0.0572 (0.0133) (0.0140) (0.0428) (0.0316) (0.0362) (0.0303) N 39,483 39,483 39,483 6080 6080 6080 R2 _0.2508 _0.2544 _0.2559 _0.2105 _0.2116 _0.2126 Ftestforβ=0 79.13 68.98 3.05 15.47 3.66 3.57

Familygroup“2”:familiesmadeupofmother(householdhead)withatleastonechildyoungerthan15yearsofage. Standarderrorscorrectedforheteroskedasticityshowninparentheses.

* _p-Value_<0.1. **_p-Value_<0.05. ***_p-Value_<0.01.

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Table6

RDestimates:effectsonlaborsupply.

Demographicgroups Cutoff=R$120.00

Linear Quadratic Cubic

(A)Laborforceparticipation

GDA1 −0.0299*** _−0.0286*** _−0.0269*** (0.0025) (0.0025) (0.0026) GDB1 −0.1346*** _−0.1311*** _−0.1261*** (0.0053) (0.0054) (0.0055) GDB2 −0.1233*** −0.1228*** −0.1176*** (0.0108) (0.0110) (0.0115) (B)Employed GDA1 −0.1207*** _−0.1175*** _−0.1117*** (0.0032) (0.0032) (0.0033) GDB1 −0.2024*** _−0.1955*** _−0.1841*** (0.0061) (0.0062) (0.0063) GDB2 −0.2580*** _−0.2539*** _−0.2398*** (0.0127) (0.0129) (0.0135)

(C)Weeklyhoursworked

GDA1 −2.4554*** _−2.3309*** _−2.2518*** (0.1723) (0.1740) (0.1782) GDB1 −4.6125*** _−4.4899*** _−4.3133*** (0.2882) (0.2901) (0.2948) GDB2 −4.9221*** _−4.6078*** _−4.2982*** (0.5605) (0.5660) (0.5826)

(1)GDA1:men(marriedfathers)belongingtofamilygroup“1”;GDB1:women(marriedmothers)belongingtofamilygroup“1”;GDB2:women (singleordivorcedmothers)belongingtofamilygroup“2”.

(2)Standarderrorsinparentheses.

(3)BesidesthevariablesspecifiedinEq.(1),thefollowingcovariateswereused:region,sectorofactivity,race,age,agesquared,schooling,and dummyvariableindicatingifindividualsholdaformaljob.

* _p-Value_<0.1. ** _p-Value_<0.05. ***_p-Value_<0.01.

5.3. Eligibilitycriterionandlaborsupply

Thusfar,wehavefoundthat(i)thereisgreaterdensityofindividualsimmediatelybelowthethresholdlevel of theeligibilitycriterionforthePBFalongtheexantefamilyincomepercapitadistribution;and(ii)theindividuals immediatelybelowthethresholdlevelofthePBFeligibilitycriterionaremorelikelytoparticipateintheprogram.In thissection,wefurtherinvestigatewhethertherearesuggestiveevidencesindicatingthatindividualsmanipulatetheir participationeligibilitybychangingtheirlaborsupplydecisions.

Inordertodothis,weperformtwoexercises.First,weobtainseparateregressiondiscontinuity(RD)estimatesof Eq.(1)forthelaborsupplyoutcomesofthreedifferentdemographicgroups.Theyare:GDA1:men(marriedfathers) belongingtofamilygroup“1”;GDB1:women(marriedmothers)belongingtofamilygroup“1”;GDB2:women(single ordivorcedmothers)belongingtofamilygroup“2.”Theoutcomesutilizedarelaborforceparticipation,employed, andweeklyhoursworked.Weusedthreedifferentspecificationsfortheg(Ri)function:linear,quadratic,andcubic.

TheresultsfortheβcoefficientsforeachregressionarepresentedinTable6.

Table6showsthat,foralldemographicgroups,individualsimmediatelybelowthecutoffvalueofR$120.00supply lesslaborthanthoseimmediatelyabovethisthreshold.Theyarelesslikelytoparticipateinthelabormarket,lesslikely tobeemployedduringthesurveyweekofreference,andworkfewerhoursperweek.Moreover,women(marriedor single)reducetheirlaborsupplymorethanmarriedmen.Infact,thepointestimatesforGDA1arealwaysbelowthe pointestimatesforGDB1andGDB2.6

6 _We_also_performed_the_same_exercise_of_Table₆_using_different_subsamples_of_families_with_income_below_400,_500,_and₆₀₀_reals._Most_of_the

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Table7

McCrarydiscontinuityestimators(inlog)bytooccupationalstatus.

Cutoffs Familygroup“1” Familygroup“2”

ocupi06=1 ocupi06=0 ocupi06=1 ocupi06=0

R$120.00 −0.347** _−0.022 _−0.287* _−0.208 (0.083) (0.046) (0.120) (0.121) R$130.00 −0.157 −0.064 −0.191 −0.061 (0.089) (0.045) (0.127) (0.103) R$140.00 −0.314** _−0.071 _−0.073 _−0.099 (0.088) (0.045) (0.133) (0.099) R$150.00 −0.143 −0.063 −0.048 −0.063 (0.103) (0.048) (0.159) (0.113) N 4262 35,221 1790 4290

Standarderrorsinparentheses.

Valuescalculatedbasedonthelocaldiscontinuityestimator(McCrary,2008).

Familygroup“2”:familiesmadeupofmother(householdhead)withatleastonechildyoungerthan15yearsofage.

* _p-Value_<0.05. **_p-Value_<0.01.

Thesecondexerciseclassifiestheindividualsintotwooccupationalgroupsaccordingtotheirdegreeoflabormarket attachment.Groupocupi06=1designatesindividualsemployedforlessthanfivemonthsin2006,orthosewhowere

unemployedinthesurveyweekofreference,butemployedinthatyear;groupocupi06=0designatesindividualswho

werecontinuouslyemployedthroughouttheyear.Theideabeingexaminedisthatindividualsingroupocupi06=1are

lessattachedtothelabormarket,and;therefore,morepronetomanipulatingtheirincomebychangingtheirlaborsupply inordertoqualifyforthePBF.WeperformtheMcCrarytestonthedistributionofthelogarithmofincomeusingthe locallinearestimatorseparatelyforeachgroup.WeusedifferentcutoffvaluesandtheresultsarepresentedinTable7. Table7showsthatdiscontinuitiesonlyremainforthegrouplessattachedtothelabormarket,especiallyaroundthe cutoffofR$120.00.Thedensityislowerdirectlyafterthisthresholdandthedifferenceisstatisticallysignificant.

The results of Table7 are additionalsuggestive evidence that individualsmanipulate their eligibility status by changingtheirlaborsupplydecisionssincethediscontinuityisobservedonlyamongthosethatareweakerattached tothelabormarket.

Finally,twocaveatsshouldbemade.First,weinterprettheresultsofgreaterincidenceofprogramparticipation andlowerlaborsupplyofhouseholdsslightlybelowthecutoffvalueofthePBFeligibilitycriterionasevidencesof eligibilitymanipulation.However,itmightbeacknowledgedthatsomedecreaseofthelaborsupplymaybeduetothe incomeeffectofthecashtransferitself.Nonetheless,wedonotthinkthatthelowerlaborsupplyisentirelyduetothe incomeeffectbecauseoftheadditionalfindingofthegreaterdensityimmediatebelowthethresholdvalueoftheex antepercapitahouseholdincome.Somepartofthisreductionmightbeduetothemanipulationalthoughtheprecise amountofitisunclear.

Second, the results are also consistent with an alternative explanation. It may be that households underreport incometobeeligibletothePBFandthosethatunderreporttheirincomearemorelikelytoalsounderreporttheirlabor supply.Inthiscasethemanipulationwouldbeofadifferentmechanism.Therearenoreallaborsupplyresponses butmanipulationinthereportingitself.AlthoughthePNADinformationarereportedtotheintervieweroftheIBGE (Braziliancensusbureau)forotherpurposesandnottotheofficialsfromthePBF,wecannotruleouttheunderreport manipulationhypothesis.

6. Conclusions

Inthispaper,weassessedtheexistenceofeligibilitystatusmanipulationbyindividualsforparticipationinthePBF. Ourgoalwastoinvestigateapossiblechannelforthistypeofmanipulationthroughchangesinthetimeallocation

specification.Whenusingthequadraticspecification,mostoftheresultsforGDB1arenegativeandsignificantlydifferentfromzerobutforGDA1 andGDB2becomepositive.

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decisionsofindividuals.ThePBFeligibilitycriterionestablishesthatfamilieswithamonthlyfamilyincomepercapita equaltoorbelowR$120.00areeligiblefortheprogram.Evidenceofmanipulationwasobtainedthroughtheformal testproposedbyMcCrary(2008).Wefoundthat(i)thereisagreaterdensityofindividualsimmediatelybelowthe thresholdlevelof theeligibility criterionforthe PBFalongthe exantefamilyincomeper capitadistribution;(ii) individualsimmediatelybelowthethresholdleveloftheeligibilitycriterionPBFaremorelikelytoparticipateinthe program;and(iii) individualsimmediatelybelow thethresholdlevelof theeligibilitycriterionPBFare lesslikely toparticipateinthelabormarket,lesslikelytobeemployed,andworkfewerhoursinthelabormarket.Moreover, individualswhoarelessattachedtothelabormarketaretheonesassociatedwiththemanipulationoftheireligibility status.Finally,mostoftheresultsarerobustfordifferentperiodsoratdifferentcutoffpoints.

Ourfindingscontributetotwodebatesinthemicroeconomicdevelopmentliterature.First,thereisadiscussionof thebestwaytotargetingsocialprograms.Thetargetingmechanismcanuseobjectiveinformation(e.g.,household surveys)to constructmeans testsor proxy means tests,or subjectiveinformationdirectlyfrom the individuals or communities,orevenacombinationofbothsourceofinformation.Therearetrade-offsinvolvedinthischoice.The useofsubjectiveinformationismoresensitivetoshocksthatchange theeligibilitystatus.Ontheotherhand,itis morepronetomisinformationorconflictinginformation.Theuseofobjectiveinformationcanbemoreverifiablebut lesssensitivetochangesintheeligibilitystatus.Moreover,thereisatarde-offbetweenmeanstestedandproxymeans

testedprograms.Themeanstestedtargetingismorelikelytoincurininclusionerrorwhereastheproxiesmeanstested

targetingismorelikelytoincurinexclusionerror.Therearescantevidencesonthesetrade-offs.Amongthefewones, Alatasetal.(2012)showevidenceofthetrade-offbetweentheusesofobjectiveorsubjectiveinformation.Theyrunan experimentonIndonesiaonthreeapproachestotargetingthepoorfamilies:proxymeanstests,communitytargeting whereindividualsrankeveryonefromrichesttopoorest,andahybridofboth.Theyfindthatproxymeanstestsperform alittle betterintargetingthepoorbutcommunitytargetingresultsinbettersatisfactionperhapsbecause theapply adifferentconceptof tobeingpoor.Camacho andConover(2011),ontheotherhand,showevidenceofinclusion errorfromaprograminColombiawherelocalpoliticiansmanipulatefortheirownintereststheinformationcollection from“poor”householdsinordertoclassifythemtothecentralgovernmentwelfareprogram.Differentfromthesetwo studies,ourresultsaddtothisdebatebypresentingnewevidenceofthecostoftheuseofproxymeansteststhrough inclusionerrordrivendirectlybythemanipulationofthehouseholdsthemselves.

Second,thereareseveralstudiesthataimedtoestimatethecausalimpactoftheconditionalcashtransferprograms onadultlaborsupplyinBrazil(e.g.,Soaresetal.,2007;FerroandNicollela,2007;Tavares,2008;Teixeira,2008;Covre etal.,2008;FoguelanddeBarros,2008).Thesestudiesusedifferentempiricalstrategiestocompareallbeneficiaries againstobservationallysimilarnon-beneficiaries.Theirresultsarenotconclusive.Somefindnoeffectsandothersfind negativeeffects particularlyamongwomen.Ourresultssuggestthat theirestimationsmaybebiasedsincewe find suggestiveevidenceofreversecausalityfromlaborsupplytoprogramparticipation.

Byconsidering allof ourresults together, webelievetheysuggest evidencethat someindividualsdeliberately reducetheirincomeinordertotakepartinthePBF.Thisisstronglyobservedamongwomen.Theevidenceindicating eligibilitystatusmanipulationaddressedinthisstudydemandstheattentionofpolicymakers,inorderfor themto developproperlydesignedsocialprograms.Mechanismstominimizeadverseeffectsneedtobeconstructed.Thiswill helppreventthediversionoffinancialresourcesfromtheprimarygoalsoftheseprograms,whichseektofightpoverty andextremepovertyintheshorttermandlongterm.

AppendixA.

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TableA.1

RDestimates:probabilityofahouseholdparticipatinginthePBF–quadraticpolynomial.

Coefficients Description Familygroup“1” Familygroup“2”

Percapitaincomebelow Percapitaincomebelow

400reals 500reals 600reals 400reals 500reals 600reals

β Eligibility(D) 0.0335*** _0.0359*** _0.0389*** _0.0368 _0.0306 _0.0321

(0.0108) (0.0103) (0.0100) (0.0266) (0.0255) (0.0246)

N 29,193 31,605 33,301 4934 5218 5408

R2 _0.1983 _0.2144 _0.2259 _0.1657 _0.1787 _0.1875

Standarderrorscorrectedforheteroskedasticityshowninparentheses. Cutoff=R$120.

TableA.2

Effectsonlaborsupply(cutoff=R$120).

Demographicgroups Incomebelow400reals Incomebelow500reals Incomebelow600reals

Linear Quadratic Linear Quadratic Linear Quadratic

Laborforceparticipation

GDA1 −0.0125*** _0.0173*** _−0.0175*** _0.0127*** _−0.0211*** _0.0108** (0.0039) (0.0048) (0.0035) (0.0045) (0.0033) (0.0044) GDB1 −0.0501*** _−0.0686*** _−0.0610*** _−0.0715*** _−0.0816*** _−0.0716*** (0.0082) (0.0101) (0.0074) (0.0096) (0.0069) (0.0093) GDB2 −0.0328* _0.0676*** _−0.0574*** _0.0538*** _−0.0840*** _0.0520*** (0.0172) (0.0206) (0.0156) (0.0197) (0.0146) (0.0190) Employed GDA1 −0.0482*** _0.0392*** _−0.0679*** _0.0314*** _−0.0814*** _0.0277*** (0.0050) (0.0061) (0.0045) (0.0058) (0.0042) (0.0055) GDB1 −0.0487*** _−0.0714*** _−0.0688*** _−0.0737*** _−0.0995*** _−0.0756*** (0.0091) (0.0112) (0.0083) (0.0107) (0.0078) (0.0104) GDB2 −0.0771*** _0.0723*** _−0.1207*** _0.0534** _−0.1631*** _0.0483** (0.0198) (0.0236) (0.0180) (0.0226) (0.0170) (0.0219)

Weeklyhoursworked

GDA1 −1.0748*** _0.1236 _−1.3114*** _0.1459 _−1.4919*** _0.2384 (0.2417) (0.3012) (0.2209) (0.2890) (0.2090) (0.2807) GDB1 −1.6399*** _−0.5514 _−2.1652*** _−0.7638 _−2.4249*** _−0.8954* (0.4180) (0.5381) (0.3767) (0.5140) (0.3540) (0.4973) GDB2 −2.7858*** _−0.8925 _−3.3337*** _−0.8052 _−3.5339*** _−0.9189 (0.7934) (1.0083) (0.7245) (0.9567) (0.6910) (0.9272)

Standarderrorscorrectedforheteroskedasticityshowninparentheses.

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