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Cash Transfers and Labor Supply: Evidence from A Large-Scale Program in Iran

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  • Djavad Salehi-Isfahani

    (Virginia Tech)

  • Mohammad H. Mostafavi-Dehzooei

Abstract

We study the impact of a nation-wide unconditional cash transfer program on labor supply in Iran. In 2011, the government started monthly deposits of cash into individual family accounts amounting to 29% of the median household income. We use panel data and fixed effects to study the causal effect of the cash transfers on labor supply using the exogenous variation in the intensity of treatment, which we define as the value of cash transfers relative to household income in the year before transfers. We also use a difference-in-differences methodology that relies on exogenous variation in the time households first started receiving transfers. With the exception of youth, who have weak ties to the labor market, we find no evidence that cash transfers reduced labor supply, while service sector workers appear to have increased their hours of work, perhaps because some used transfers to expand their business.

Suggested Citation

  • Djavad Salehi-Isfahani & Mohammad H. Mostafavi-Dehzooei, 2017. "Cash Transfers and Labor Supply: Evidence from A Large-Scale Program in Iran," Working Papers 1090, Economic Research Forum, revised 05 Apr 2017.
  • Handle: RePEc:erg:wpaper:1090
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    3. Jan Gromadzki, 2021. "Labor supply effects of a universal cash transfer," IBS Working Papers 02/2021, Instytut Badan Strukturalnych.
    4. Coelho, José, 2020. "Universal basic income and skill-biased technological change," MPRA Paper 99195, University Library of Munich, Germany, revised 20 Mar 2020.
    5. Zaineb Majoka & Robert Palacios, . "Targeting versus Universality," World Bank Other Operational Studies, The World Bank, number 32789, September.
    6. Wang, Dazhe & Qian, Wenrong & Guo, Xiaolin, 2019. "Gains and losses: Does farmland acquisition harm farmers’ welfare?," Land Use Policy, Elsevier, vol. 86(C), pages 78-90.
    7. Siameh, Celestine O., 2020. "Universal Basic Income, Targeted Cash Transfers, and Progressive Taxation: Reducing Income Inequality in South Africa," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304571, Agricultural and Applied Economics Association.
    8. Awaworyi Churchill, Sefa & Iqbal, Nasir & Nawaz, Saima & Yew, Siew Ling, 2021. "Unconditional cash transfers, child labour and education: theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 437-457.
    9. Sara Rica & Lucía Gorjón, 2019. "Assessing the impact of a minimum income scheme: the Basque Country case," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 10(3), pages 251-280, November.
    10. Berman, Matthew, 2018. "Resource rents, universal basic income, and poverty among Alaska’s Indigenous peoples," World Development, Elsevier, vol. 106(C), pages 161-172.
    11. Juliana Mesén Vargas, 2018. "Income Effect on Labor Outcomes for People Living in Poverty: the case of PROGRESA," LIDAM Discussion Papers IRES 2018015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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