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Cash Transfers and Formal Labor Markets : Evidence from Brazil (English)

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.

Details

  • Author

    Gerard,François, Naritomi,Joana, Silva,Joana C. G.

  • Document Date

    2021/09/22

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS9778

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Brazil,

  • Region

    Latin America & Caribbean,

  • Disclosure Date

    2021/09/22

  • Disclosure Status

    Disclosed

  • Doc Name

    Cash Transfers and Formal Labor Markets : Evidence from Brazil

  • Keywords

    Municipalities; formal employment; Below the Poverty Line; formal labor market; conditional cash transfer program; local labor market; labor supply; extreme poverty line; month period; per capita income; average monthly income; local economy; health insurance coverage; total factor productivity; public employment program; effect on employment; health care spending; social security coverage; formal employment sector; poverty index score; low socioeconomic status; increase in labor; families with income; information on education; local government spending; labor market outcome; social protection policy; informal labor market; multiplier effect; relative change; means testing; minimum wage; negative effect; administrative datum; Population Growth; eligible family; disincentive effect; poverty threshold; descriptive statistic; research design; empirical analysis; social transfer; formal sector; substitution effect; political manipulation; point estimate; welfare program; eligibility criterion; statistical model; entitlement program; school attendance; income effect; household survey; informal sector; health check; social program; transitory poverty; income category; family leave; recent evidence; vertical line; federal budget; local demand; demographic characteristic; rural village; credit market; lower-income family; best practice; positive correlation; employment categories; government welfare; federal government; previous subsection; family composition; monthly data; literature studies; domestic worker; legal employment; labor protection; termination dates; brazilian census; accurate information; poverty estimate; national survey; interest policy; development path; Informal Economy; national household; sample survey; in family; family size; income threshold; rural economy; pregnant woman; summary statistic; geographical level; target social; budget constraint; household asset; id number; geographic location; recent studies; richer countries; eligibility threshold; budgetary constraint; local taxes; working condition; geographical variation; average change; labor demand; literature review; open access; low-skill occupation; development policy; relative increase; liquidity constraint; demand shock; marginal propensity; direct transfer; census data; welfare recipient; Job Creation; market externality; Research Support; primary focus; Economic Policy

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Citation

Gerard,François Naritomi,Joana Silva,Joana C. G.

Cash Transfers and Formal Labor Markets : Evidence from Brazil (English). Policy Research working paper,no. WPS 9778 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/769531632319615215/Cash-Transfers-and-Formal-Labor-Markets-Evidence-from-Brazil