Conditional cash transfer and informality in Brazil

Ana Luiza Neves De Holanda Barbosa,Carlos Henrique Leite Corseuil

doi:10.1186/s40175-014-0024-0

Ana Luiza Neves De Holanda Barbosa, Carlos Henrique Leite Corseuil

Open Access

https://doi.org/10.1186/s40175-014-0024-0

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Abstract

This study analyses the impact of Bolsa Familia (a Brazilian conditional cash transfer programme) in the allocation of labour inputs regarding formal and informal activities. The methodology relies on a discontinuity in the programme eligibility rule regarding children’s age to attain the identification of a LATE parameter. Our results suggest that the cash transfer does not affect the occupational choice of Brazilian adults neither among formal and informal jobs nor the allocation of hours across sectors. I38, O17.

Highlights

1 Introduction Bolsa Família Program is a conditional cash transfer (CCT) which aims to improve the welfare of poor families
As CCT are usually targeted to low income households, there may be an incentive to marginally eligible households to receive earnings in ways non-verifiable to third parties, specially government or inspectors of the CCT program
The aim of this study is to investigate to what extent CCT programmes like BFP distorts the occupational choice of beneficiaries in the sense of making them more likely to shift supply of labour inputs pro informal activities

Summary

Introduction

Bolsa Família Program ( known as BFP) is a conditional cash transfer (CCT) which aims to improve the welfare of poor families. In 2013, BFP had already benefited more than 13 million households In this context, some concerns are raised regarding possible deleterious effects of this CCT on the labour supply of adults. As CCT are usually targeted to low income households, there may be an incentive to marginally eligible households to receive earnings in ways non-verifiable to third parties, specially government or inspectors of the CCT program. In this sense informal activities could be preferable, even more when there is high prevalence of this kind of activities, as in Brazil, or Latin America in general

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