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Cash Transfers and Labor Supply: New Evidence on Impacts and Mechanisms

Author

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  • Cuong Viet Nguyen

    (International School, Vietnam National University, Hanoi, Viet Nam; and Mekong Development Research Institute, Hanoi, Viet Nam)

  • Finn Tarp

    (University of Copenhagen, Denmark)

Abstract

We study the impact of a national cash transfer program in Vietnam on labor supply using large household surveys and a regression-discontinuity design based on discontinuity in age eligibility. We do not find evidence of a disincentive effect of the cash transfer on labor supply for adults aged 15-64. More importantly, we find robust evidence that the transfer program causes the adults to move from self-employed non-farm work to wage-paying jobs. A likely mechanism is that the transfer program reduces the labor force participation of older people, and they help housework and childcare for younger adults to have wage-paying jobs.

Suggested Citation

  • Cuong Viet Nguyen & Finn Tarp, 2023. "Cash Transfers and Labor Supply: New Evidence on Impacts and Mechanisms," DERG working paper series 23-18, University of Copenhagen. Department of Economics. Development Economics Research Group (DERG).
    • Handle: RePEc:kud:kuderg:2318
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    More about this item

    Keywords

    Cash transfer; social security; employment; labor market participation; Vietnam;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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