Universal Allowance per Child for social protection in Argentina and its effects on labour formalization

According to the INDEC (the National Institute of Statistics and Census from Argentina), poverty in Argentina reached the 32,3% of the population in 2016. To fight poverty the government takes into practice a low-income support program called the Universal Allowance per Child for social protection. It consists of a monthly payment made by the ANSES (the National Social Security Administration) to families with children age under 18 and with a maximum of 5 children. In addition, it gives priority to disabled and the younger children. Besides, one of the two parents is paid, and the mother is prioritized.

People who receive this aid must fulfil certain requisites and conditions. This payment is transfer to people who is unemployed, to workers in the informal sector with incomes lower or equal to the minimum wage, independent workers, workers from the domestic service, and people who receive certain programs offered by the government. Moreover, the beneficiary and its family need to be registered in the ANSES. It is also required an annual schooling certification of the children and health controls. As regards the amount of money instalment, this depends on the income of the family. The families with the lowest income receive a payment of $1246 (77 EUR). And the ones with the highest income receive a payment of $258 (15,88 EUR).

The Universal Allowance per child caused different impacts. These ones include social, economic, educational and labour impacts. One of the most relevant is the negative effect on labour formalization. According to the research made by Agis, Cañete and Panigo, the welfare indicators improved with this low-income support program, mainly in the poorest regions of Argentina. In addition, they found that the indigence indicators reduced from 55% to 70%, and inequality more than 30%. Further, this program was able to reduce the probability of indigence of the most vulnerable group below the one of the rest of the society. Finally, it also decreased the poverty indicators. The authors think that although the program has positive impacts it has to be complemented with other labour policies. Kliksberg and Novacovsky evaluated the impacts of the program and concluded that it significantly increased the amount of health controls of children and teenagers. Besides, it rose the school attendance rates and guarantee the access to education since the first years of life.

As regards labour formalization, there are different researches that suggest that the Universal Allowance per Child has a negative impact on it. Gasparini and Garganta made an econometric study and obtained that the formalization of people not eligible for the program accelerated with the economic recovery (after 2009), while the formalization rate of the eligible people remains standstill. They concluded that the probability of formalization of the eligible ones is reduced approximately 40% with respect to what would happen without the program. They point out an interesting result that is the fact that the program does not encourage registered workers to become informal ones. Moreover, Sticco says in an interview with La Nación newspaper that this program discourages the participation in the labour market because people need to comply the requisite of earning an income below the minimum wage, therefore it will encourage labour precariousness and informality. On the contrary, there are other authors such as Boffi that studied that there is no evidence to state that the beneficiaries from the program reject a job opportunity from the formal sector.

In conclusion, the low-income support program called Universal Allowance per Child applied in Argentina has impacts in different issues. On the one hand, positive effects can be observed in education, health and levels of indigence. This may probably be caused by the condition of having an annual schooling certification and health care controls in order to receive the transfer. On the other hand, there are negative effects on the labour market since, as different authors suggest, it discourages formalization. This may mainly be provoked by the fact that beneficiaries must earn an income lower than the minimum wage. And there might be other factors that discourage people to enter the formal labour market.

Delfina Murisengo


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