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Welfare Programs and Labor Supply in Developing Countries. Experimental Evidence from Latin America

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Author Info

  • María Laura Alzúa

    (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - FCE - UNLP)

  • Guillermo Cruces

    (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - FCE - UNLP and CONICET)

  • Laura Ripani

    (Inter-American Development Bank)

Abstract

This paper studies the effect of welfare programs on work incentives and the labor supply of adults in developing countries. The document builds on the experimental evaluations of three programs implemented in rural areas: Mexico’s PROGRESA, Nicaragua’s Red de Protección Social (RPS) and Honduras’ Programa de Asignación Familiar (PRAF). The impact of welfare on labor supply has been widely studied in developed countries, where most recent initiatives attempt to mitigate negative effects on work incentives. The programs under study are conditional cash transfers (CCT), which combine monetary benefits with incentives for curbing child labor and fostering the accumulation of human capital. Unlike their counterparts in developed economies, however, they do not account for potential impacts on the labor supply of adults, and there is little systematic evidence on this aspect despite a wealth of empirical studies on their intended outcomes. Comparable results for the three countries indicate mostly negative but small and non-significant effects of the programs on the employment of adults, no reallocation of labor between agricultural and other sectors, and a reduction in hours worked by adults in eligible households in RPS. Moreover, PROGRESA had a positive effect on beneficiaries’ wages. The programs did not imply major disincentives to work, despite substantial transfers, but they had some effects on local labor markets. This mechanism is related to recent findings on the indirect impact of CCTs on ineligible households, and implies that future evaluation studies and designs should account for the equilibrium effects of the interventions.

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Bibliographic Info

Paper provided by CEDLAS, Universidad Nacional de La Plata in its series CEDLAS, Working Papers with number 0095.

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Length: 45 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:dls:wpaper:0095

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Web page: http://cedlas.econo.unlp.edu.ar/
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Keywords: welfare programs; income support; labor supply; adult work incentives; conditional cash transfers; randomized control trials; developing countries.;

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References

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Citations

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Cited by:
  1. Leibbrandt, Murray & Lilenstein, Kezia & Shenker, Callie & Woolard, Ingrid, 2013. "The influence of social transfers on labour supply: A South African and international review," SALDRU Working Papers 112, Southern Africa Labour and Development Research Unit, University of Cape Town.
  2. Mariano Bosch & Marco Manacorda, 2012. "Social Policies and Labor Market Outcomes in Latin America and the Caribbean: A Review of the Existing Evidence," CEP Occasional Papers 32, Centre for Economic Performance, LSE.
  3. Rafael Novella & Laura Ripani & Guillermo Cruces & Maria Laura Alzuá, 2012. "Conditional Cash Transfers, Female Bargaining Power and Parental Labour Supply," IDB Publications 78223, Inter-American Development Bank.
  4. Debowicz, Dario & Golan, Jennifer, 2013. "The impact of Oportunidades on human capital and income distribution: A top-down/bottom-up approach," IFPRI discussion papers 1257, International Food Policy Research Institute (IFPRI).
  5. Armando Barrientos & Juan Miguel Villa, 2013. "Antipoverty transfers and labour force participation effects," Brooks World Poverty Institute Working Paper Series 18513, BWPI, The University of Manchester.
  6. Asel Isakova & Alexander Plekhanov & Jeromin Zettelmeyer, 2012. "Managing Mongolia’s resource boom," Working Papers 138, European Bank for Reconstruction and Development, Office of the Chief Economist.
  7. Fernando Fernandez & Victor Saldarriaga, 2014. "Do benefit recipients change their labor supply after receiving the cash transfer? Evidence from the Peruvian Juntos program," IZA Journal of Labor & Development, Springer, vol. 3(1), pages 1-30, December.
  8. Alderman, Harold & Yemtsov, Ruslan, 2013. "How can safety nets contribute to economic growth ?," Policy Research Working Paper Series 6437, The World Bank.
  9. Leonardo Gasparini & Guillermo Cruces, 2010. "Las Asignaciones Universales Por Hijo. Impacto, Discusión y Alternativas," CEDLAS, Working Papers 0102, CEDLAS, Universidad Nacional de La Plata.
  10. Lia Chitolina & Miguel Nathan Foguel & Naercio Menezes-Filho, 2013. "The Impact of the Expansion of the Bolsa Família Programme on the Time Allocation of Youths and Labour Supply of Adults," Working Papers 120, International Policy Centre for Inclusive Growth.
  11. Alzúa, María Laura & Cruces, Guillermo & Ripani, Laura, 2012. "Welfare Programs and Labor Supply in Developing Countries: Experimental Evidence from Latin America," IZA Discussion Papers 6959, Institute for the Study of Labor (IZA).
  12. Sebastian Galiani & Patrick J. McEwan, 2013. "The Heterogeneous Impact of Conditional Cash Transfers," CEDLAS, Working Papers 0149, CEDLAS, Universidad Nacional de La Plata.
  13. Andrés Ham, 2010. "The Effect of Conditional Cash Transfers on Educational Opportunities - Experimental Evidence from Latin America," CEDLAS, Working Papers 0109, CEDLAS, Universidad Nacional de La Plata.
  14. Solomon Asfaw & Silvio Daidone & Benjamin Davis & Josh Dewbre & Alessandro Romeo & Paul Winters & Katia Covarrubias & Habiba Djebbari, 2012. "Analytical Framework for Evaluating the Productive Impact of Cash Transfer Programmes on Household Behaviour ? Methodological Guidelines for the From Protection to Production Project," Working Papers 101, International Policy Centre for Inclusive Growth.
  15. Nicola Brandt, 2012. "Reducing Poverty in Chile: Cash Transfers and Better Jobs," OECD Economics Department Working Papers 951, OECD Publishing.

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