Cash Transfers and Formal Labor Markets : Evidence from Brazil
Cash transfer programs have expanded widely in developing countries and have been credited for sizable reductions in poverty. However, their potential disincentive effects on beneficiaries’ labor supply have spurred a heated policy debate. This paper studies the impact of a large-scale program...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/769531632319615215/Cash-Transfers-and-Formal-Labor-Markets-Evidence-from-Brazil http://hdl.handle.net/10986/36305 |
| Summary: | Cash transfer programs have expanded widely in developing
countries and have been credited for sizable reductions in
poverty. However, their potential disincentive effects on
beneficiaries’ labor supply have spurred a heated policy
debate. This paper studies the impact of a large-scale program
Bolsa Familia in Brazil on local labor markets in a
context where such concerns could be particularly strong:
eligibility is means-tested and the paper focuses on the formal
labor market, where earnings are more easily verifiable.
Yet, the analysis finds that an expansion of Bolsa Familia
increased local formal employment, using variation in the
size of the reform across municipalities. The evidence is
consistent with multiplier effects of cash transfers in the
local economy, which dominate potential negative effects
on formal labor supply among beneficiaries. |
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