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In-kind transfers in Brazil: household consumption and welfare effects

Author

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  • Bruno Palialol
  • Paula Pereda

Abstract

Programa de Alimentação dos Trabalhadores (PAT) creates tax incentives for firms to provide 20 million workers with in-kind transfers in Brazil. Economic theory supports they are distortive when compared to cash transfers but this is not clear when the latter are subject to payroll taxes. Using a propensity score analysis we find evidence that PAT increases poor households food consumption between 15.7% and 25.0% and deadweight loss associated with distortions reach US$63.1 (R$150.1) million. Overconsumption, however, may not be increasing worker’s nutrition, as aimed by the program.

Suggested Citation

  • Bruno Palialol & Paula Pereda, 2019. "In-kind transfers in Brazil: household consumption and welfare effects," Working Papers, Department of Economics 2019_26, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2019wpecon26
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    References listed on IDEAS

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    More about this item

    Keywords

    In-kind transfers vs cash transfers; Programa de Alimentação dos Trabalhadores (PAT); Propensity score analysis.;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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