The Employment Effects of Generous and Unconditional Cash Support

60 Pages Posted: 2 Mar 2023

See all articles by Timo Verlaat

Timo Verlaat

CPB Netherlands Bureau of Economic Policy Analysis; Utrecht University - School of Economics

Federico Todeschini

Universitat Pompeu Fabra

Xavier Ramos

Universitat Autònoma de Barcelona; Institute for the Study of Labor (IZA)

Abstract

While unconditional cash transfers have been studied extensively in developing countries, little is known about their effects in a wealthier context. Through a randomized controlled trial, we study the employment effects of a generous and unconditional transfer targeting low-income families in Spain. Two years into the program, subjects assigned to treatment are 20 percent less likely to work than subjects assigned to a control group. Assignment to an activation plan does not attenuate adverse effects; a more lenient transfer withdrawal rate does. It appears that effects are driven by subjects with children, suggesting substitution of labour for care tasks.

Keywords: welfare reform, cash transfer, basic income, policy evaluation, RCT

JEL Classification: C93, H53, I38, J64

Suggested Citation

Verlaat, Timo and Todeschini, Federico and Ramos, Xavier, The Employment Effects of Generous and Unconditional Cash Support. IZA Discussion Paper No. 15976, Available at SSRN: https://ssrn.com/abstract=4375359 or http://dx.doi.org/10.2139/ssrn.4375359

Timo Verlaat (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

HOME PAGE: http://https://www.cpb.nl/medewerkers/timo-verlaat

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

HOME PAGE: http://https://www.uu.nl/medewerkers/TLLVerlaat

Federico Todeschini

Universitat Pompeu Fabra

Xavier Ramos

Universitat Autònoma de Barcelona ( email )

Dept. Economia Aplicada
Campus UAB
Bellaterra, Barcelona 08193
Spain

Institute for the Study of Labor (IZA)

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

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