Conditional Cash Transfers on the Labor Market: Evidence from Young French Jobseekers

Original source

Romain Aeberhardt; Vera Chiodi; Bruno Crépon; Mathilde Gaini; Anett John; Augustin Vicard

Dated research draft · Version date: July 2020

Permission for School’s use is unestablished.

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Caseworker Quality Mediated Engagement

"Caseworker quality is measured as the proportion of jobseekers who drops out of the program after first meeting their caseworker, using administrative records from the universe of jobseekers in 2010... Average human capital investment and average search are higher with high-quality caseworkers."

Driver's License Asset Accrual in Youth Mobility

"We detect no effect on any type of employability investment, with the exception of driver's licenses: the number of participants who start a course to obtain their driver's license is 3 percentage points higher in the treatment group, with a mean of 41.9% in the control group."

Incentive Signaling and Intrinsic Motivation Paradox

"Providing incentives sends a signal which people try to interpret, inferring things about a hidden part of themselves or about what they are being encouraged to do."

Income Source Substitution Effect

"The increase in JYC income is associated with a decrease of €47 in other income, of which employment income (€26, not significant), parents (€10), and other non-work sources (€11)."

Income Tapering Disincentive Effect

"Moreover, in the first six months, there is a decrease in full-time employment equal to three percentage points. This effect is consistent with the disincentives traditionally associated with transfer payments and taper rules."

Capital Indivisibility under Financial Constraints

"Remembering the €40 increase in overall income, it appears that participants used the cash transfers to increase neither their consumption nor their investment, but simply saved the surplus. This may seem puzzling, but it is consistent with the possibility of financial constraints to human capital investments: the cash transfers are too small to allow youths to abandon low-skill jobs and start training courses, but they are sufficient to allow saving for such investments."

Institutional Trust Building via Financial Transfers

"Furthermore, we see a sustained improvement in the trust of young jobseekers into the JYC: Participants in the cash transfer group were 7.8 percentage points more likely to have trust in the JYC after 24 months of the program (control: 69.9%)."

Intermediate Target Conditioning

"Cash transfers lead to a significant increase in program participation (which mainly entails meetings with counselors), and sharply reduced drop-out rates. As a result, there is a large increase in the job offers, vocational training and career building workshops proposed to the young jobseekers. However, the jobseekers' response to these increased opportunities for employability investment is a precisely estimated zero."

Labor Market Disconnection Heterogeneity in Human Capital Response

"Subjects who were the most disconnected from the labor market invested more than less disconnected subjects in the treatment group, while they invested less in the control group."

Local Unemployment Rate Moderation of CCT Reliance

"However, meeting attendance increases significantly more in areas with high unemployment, and income increases only in those areas. The evidence suggests that jobseekers in high-unemployment areas have few alternatives to search, and are heavily reliant on external financial help."

Locus of Control Effort Allocation

"In line with Prediction 1, mean human capital investment is significantly higher for those with an internal locus of control - i.e., for those who believe their life is shaped by their own actions, rather than by external factors. Interestingly, and similar to the findings for patience, search effort is significantly lower for those with an internal locus, consistent with a more long-term focus on building human capital."

Present Bias in Human Capital Investment

"As expected, more patient jobseekers invest significantly more in human capital (through apprenticeships or trainings) than their impatient counterparts. In contrast, they invest significantly less into job search."