Estimates of the Benefit Incidence of Workfare

Workfare has become a central policy in Argentina since mid-2002, when the government increased the number of beneficiaries from 100,000 to two million people in a country of thirty-nine million. In this paper I assess the focalization of the program and estimate its income effects using individual panel data for the period 2000-02. In addition to standard nearest-neighbor matching estimators, I compute difference-in-differences estimators and allow for nonpositive income effects. I find that only 55 percent of the participants were in the poorest quintile of the income per capita distribution. The estimated average income effect of the program during participation was about one-third of the average benefit handed out by the program. While there is some evidence that the program had a higher benefit for the poor, for a large number of relatively wealthier individuals the program did not make a big difference. These results appear to be driven, at least partly, by weak enforcement of work requirements and eligibility conditions. These findings question the efficacy of this program as an effective tool for addressing poverty.