Private and Public Transfers: Complementary or Substitutes? An Analysis Based on AFAM-PE

In international academic discourse, there are conflicting findings regarding the extent to which public income transfers
complement or substitute for private transfers, particularly in the case of non-resident parents. On one hand, parents
might perceive their contribution as unnecessary, or at least reduce it, since the state ensures a minimum income. On
the other hand, other studies find that receiving private transfers does not lead to changes in parents’ contribution patterns.
This paper examines Uruguay’s main non-contributory cash transfer program for households with children, the
Asignaciones Familiares-Plan de Equidad (AFAM-PE). Specifically, it investigates the program’s effect on the likelihood
of non-resident parents making transfers to their children, as well as on the amounts transferred. Additionally, it analyzes
a set of mediating factors, including the passage of a 2017 law that regulates transfers from non-resident parents
with income from the formal labor market. The estimates are performed using a fuzzy regression discontinuity design,
exploiting the program’s eligibility rule. Based on households that applied to the program, we compare households with
marital dissolutions and minor children, contrasting those that receive or have received the benefit with those that never
receive it. For this purpose, we will use administrative data from the program and three waves of ESAFAM, a longitudinal
study conducted at the Institute of Economics since 2011. Preliminary results indicate that the findings vary depending on
the ESAFAM wave considered. While in 2011 public transfers appeared to reduce the probability of non-resident parents
transferring money to their children, the opposite results are found in 2017.