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Centralization, Focalization and Unwanted Consequences: Evaluating Chilean Employment Programs

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  • . Rómulo Chumacero E.
  • Ricardo Paredes M.

Abstract

This paper conducts direct tests for evaluating the performance of two types of emergency employment programs put in place in Chile since 1999. Our results suggest that decentralized and "market-driven" programs (subsidies for hiring and training) are more efficient than centralized (direct employment) programs in terms of productivity, but are targeted to people that are less vulnerable to unemployment. Direct employment programs result in moderate increases of the income of the participants' households. However, these increases may be outweighted by the costs (in present value) associated with unintended consequences (higher school drop-out and participation rates). If analyzed at the municipality level, centralized programs do not target municipalities with higher unemployment and vulnerability to unemployment, or even with lower median income levels, but appear to have a strong political component. Our results also suggest that the population targeted in direct employment programs is not more vulnerable to unemployment than the currently unemployed.

Suggested Citation

  • . Rómulo Chumacero E. & Ricardo Paredes M., 2012. "Centralization, Focalization and Unwanted Consequences: Evaluating Chilean Employment Programs," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 15(1), pages 76-89, April.
    • Handle: RePEc:chb:bcchec:v:15:y:2012:i:1:p:76-89
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    References listed on IDEAS

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    1. Jalan, Jyotsna & Ravallion, Martin, 2003. "Estimating the Benefit Incidence of an Antipoverty Program by Propensity-Score Matching," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(1), pages 19-30, January.
    2. Heshmati, Almas & Engström, Lars-Gunnar, 1999. "Estimating the Effects of Vocational Rehabilitation Programs in Sweden," SSE/EFI Working Paper Series in Economics and Finance 293, Stockholm School of Economics, revised 10 Sep 1999.
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