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The Macroeconomic Effects of Cash Transfers : Evidence from Brazil

Author

Listed:
  • Galego Mendes,Arthur
  • Miyamoto,Wataru
  • Nguyen,Thuy Lan
  • Pennings,Steven Michael
  • Feler,Leo

Abstract

This paper provides new evidence on the macroeconomic impact of cash transfers in developing countries. Using a Bartik-style identification strategy, the paper documents that Brazil’s Bolsa Familia transfer program leads to a large and persistent increase in relative state-level GDP, formal employment, and informal employment. A state receiving 1% of GDP in extra transfers grows 2.2ppts faster in the first year, with R$100,000 of extra transfers generating five formal-equivalent jobs, half of which are informal. Consistent with a demand-side mechanism, the effects are concentrated in non-tradable sectors. However, an open-economy New Keynesian model only partially captures the high multipliers estimated.

Suggested Citation

  • Galego Mendes,Arthur & Miyamoto,Wataru & Nguyen,Thuy Lan & Pennings,Steven Michael & Feler,Leo, 2023. "The Macroeconomic Effects of Cash Transfers : Evidence from Brazil," Policy Research Working Paper Series 10652, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10652
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    References listed on IDEAS

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