Assistant Professor of Economics, Getulio Vargas Foundation
Youth Responses to Cash Transfers: Evidence from Brazil
Identifying successful interventions for disadvantaged youth has recently proven challenging. This paper examines the effectiveness of cash assistance targeted to this group. We exploit an exogenous variation in the provision of cash transfers in Brazil to credibly identify how an additional year of exposure at the critical age of 18 impacts on educational, labor market, and economic self-sufficiency outcomes. We use individual-level administrative data of the largest conditional cash transfer program in the world and link them to educational and formal labor market records. We do not find evidence of significant effects of additional exposure to the program on educational attainment and economic selfsufficiency. However, we observe a small (but still positive) impact on school enrollment, which is mostly driven by male beneficiaries. We also find effects on formal labor supply only for men. For them, we show that one additional exposure to the program decreases the probability of working in the formal sector during the extra year of exposure. Five years later, this pattern reverses to an increase in participation in the formal labor force.