Research Department Working Paper n°12

Workfare programmes and their impact on the labour market: Effectiveness of Construyendo Perú

This paper estimates the medium-term effects of the workfare programme Construyendo Perú implemented in Peru to support unemployed populations in situations of poverty and extreme poverty from 2007 to 2011. I find that the intervention helps raising employment and reducing inactivity for particular groups of beneficiaries, yet at a cost of locking participants in lower quality jobs (i.e. informal, paid below the poverty line and working excessive hours). Particularly, the programme was not able to improve the perspectives of lower-educated participants in terms of job quality (although it was in terms of employment) and exacerbated the perspectives of women and higher-educated individuals. The evaluation is carried out through a regression discontinuity approach, which exploits for the first time an interesting assignment rule the programme has at the district level, namely, that only districts above a certain level of poverty and development shortcomings are eligible to participate.