Family Allowances and Child School Attendance: An Ex-Ante Evaluation of Alternative Schemes in Uruguay

Asignaciones Familiares is a child allowances program that was incepted in Uruguay in 1942 and significantly modified in 2008. The program is focused on children aged 0 to 18 and aims at alleviating poverty and promoting school attendance particularly among teen-agers. This paper presents an ex-ante evaluation on the effects of this reform on teenager school attendance, poverty, inequality and adult labour supply. Our ex-ante estimated effects indicate that teenage school attendance rates may increase by six to eight percentage points as a result of the new program, and that this change in school attendance shows a progressive pattern. The program also significantly reduces extreme poverty, and to a lesser extent, the intensity and severity of poverty. Effects on poverty incidence and inequality are of small magnitude. Finally, the transfer may influence adult labor supply, inducing a reduction of work hours for household heads and spouses.