Brazil’s Bolsa Família: Neighborhood and Racial Group Networks

Are families that live in the same neighborhood and share similar characteristics more likely to participate in welfare programs? Using a unique administrative data set, we study beneficiaries of the Bolsa Família – a Brazilian cash transfer program – from 2013 to 2015. We analyze data containing information on the living conditions of the most vulnerable families, such as income, household characteristics, schooling, and disability. An eight-digit zip code defines a neighborhood. Families form a network if they live in the same neighborhood and belong to the same racial group. We provide evidence that place of residence and racial group networks are important determinants of the family participation in the program. Individuals in a neighborhood-racial group network are more likely to to participate in the Bolsa Família than not to participate. In areas where program coverage is low, families of the same racial composition and zip code are more likely to be beneficiaries. For a given neighborhood-racial group network, the presence of one additional beneficiary implies that the probability that a non-beneficiary family will become a beneficiary is, on average, 6.5% higher than otherwise. We conduct several robustness checks, e.g., controlling for network density and coverage.