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What Is the Impact of Cash Transfers on Labour Supply?

This One Pager investigates the impact of the Brazilian Conditional Cash Transfer Programm, the Programa Bolsa Família (PBF), on beneficiaries’ decision to supply their labour. The theoretical departure is this: households have a time allocation strategy between housework activities and paid work. Income shocks, such as cash transfers, alter such time-allocation preferences. In other words, they change the relative value of time.

We assume that paid work hours do not generate any additional well-being to households, except for increases in income. As cash transfers increase income, paid time loses value relative to unpaid time. Therefore, the expected behaviour is a reduction in the supply of paid work hours and an increase in housework or leisure hours.

Posted at 08:33AM Jun 22, 2009 by IPC in Social Protection and CCTs  |  Comments[4]