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The Impact of Conditional Cash transfers on labour supply: new evidence from Brazil’s Bolsa Familia

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  • Vinicius Gonçalves Vidigal

Abstract

This paper re-examines the labour market effects of Brazil’s Bolsa Familia using nine waves (2001–2009) of individual-level PNAD data and a fixed effects strategy that controls for census-tract unobservables, state-year shocks and tract-specific trends. In contrast to earlier tract-average studies, the individual specification reveals no significant change in aggregate labour force participation or weekly hours. Beneath this neutral mean, however, clear heterogeneity emerges: employment rises for women, for non-white adults and in rural areas, while a small but significant shift from formal to informal jobs is observed among urban men close to the eligibility threshold. The pattern is consistent with liquidity and child-substitution channels outweighing pure income effects, while the sharp means-test creates incentives for marginal formal workers to conceal earnings. Overall, Bolsa Familia does not discourage work; instead, it modestly expands employment among disadvantaged groups. These findings reinforce the programme’s value as a poverty-reduction and labour-activation tool, thereby supporting the UN Sustainable Development Goals related to inclusive growth and effective social protection.

Suggested Citation

  • Vinicius Gonçalves Vidigal, 2026. "The Impact of Conditional Cash transfers on labour supply: new evidence from Brazil’s Bolsa Familia," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 18(1), pages 86-103, January.
    • Handle: RePEc:taf:jdevef:v:18:y:2026:i:1:p:86-103
    DOI: 10.1080/19439342.2025.2611036
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