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Welfare Programs and Labor Supply in Developing Countries: Experimental Evidence from Latin America

43 Pages Posted: 3 Nov 2012  

Maria Laura Alzua

CEDLAS, Universidad Nacional de La Plata

Guillermo Cruces

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS); IZA

Laura Ripani

Inter-American Development Bank (IDB)

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Abstract

This study looks at the effect of welfare programs on work incentives and the adult labor supply in developing countries. The analysis builds on the experimental evaluations of three programs implemented in rural areas: Mexico's PROGRESA, Nicaragua's RPS and Honduras' PRAF. Comparable results for the three countries indicate that the effects that the programs have had on the labor supply of participating adults have been mostly negative but are nonetheless small and not statistically significant. However, the evidence does point to the presence of other effects on labor markets. In the case of PROGRESA, there is a small positive effect on the number of hours worked by female beneficiaries and a sizeable increase in wages among male beneficiaries and a resulting increase in household labor income. Moreover, PROGRESA seems to have reduced female labor-force participation in ineligible households. These results imply that large-scale interventions may have broader equilibrium effects.

Keywords: welfare programs, income support, labor supply, work incentives, conditional cash transfers, randomized control trials, developing countries

JEL Classification: J08, J22, I38

Suggested Citation

Alzua, Maria Laura and Cruces, Guillermo and Ripani, Laura, Welfare Programs and Labor Supply in Developing Countries: Experimental Evidence from Latin America. IZA Discussion Paper No. 6959. Available at SSRN: https://ssrn.com/abstract=2170647

Maria Laura Alzua (Contact Author)

CEDLAS, Universidad Nacional de La Plata ( email )

7 NÂș 776
Buenos Aires, BA 1900
Argentina

Guillermo Cruces

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) ( email )

Centro de Estudios Distributivos, Laborales y
Sociales, Calle 6 e/47 y 48
La Plata, Provincia de Buenos Aires 1900
Argentina

HOME PAGE: http://cedlas.econo.unlp.edu.ar

IZA

P.O. Box 7240
Bonn, D-53072
Germany

Laura Ripani

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

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