The Effects of Cash Transfers on Adult Labor Market Outcomes

The basic economic model of labor supply has a very clear prediction of what should be expected when an adult receives an unexpected cash windfall: they should work less and earn less. This intuition underlies concerns that many types of cash trans...

Full description

Bibliographic Details
Main Authors:	Baird, Sarah, McKenzie, David, Ozler, Berk
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	CASH TRANSFERS LABOR SUPPLY REMITTANCES CONDITIONAL CASH TRANSFERS EMPLOYMENT
Online Access:	http://documents.worldbank.org/curated/en/334251523556191237/The-effects-of-cash-transfers-on-adult-labor-market-outcomes http://hdl.handle.net/10986/29707

id	okr-10986-29707
recordtype	oai_dc
spelling	okr-10986-297072021-06-08T14:42:45Z The Effects of Cash Transfers on Adult Labor Market Outcomes Baird, Sarah McKenzie, David Ozler, Berk CASH TRANSFERS LABOR SUPPLY REMITTANCES CONDITIONAL CASH TRANSFERS EMPLOYMENT The basic economic model of labor supply has a very clear prediction of what should be expected when an adult receives an unexpected cash windfall: they should work less and earn less. This intuition underlies concerns that many types of cash transfers, ranging from government benefits to migrant remittances, will undermine work ethics and make recipients lazy. This paper discusses a range of additional channels to this simple labor-leisure trade-off that can make this intuition misleading in low- and middle-income countries, including missing markets, price effects from conditions attached to transfers, and dynamic and general equilibrium effects. The paper uses this as a lens through which to examine the evidence on the adult labor market impacts of a wide range of cash transfer programs: government transfers, charitable giving and humanitarian transfers, remittances, cash assistance for job search, cash transfers for business start-up, and bundled interventions. Overall, cash transfers that are made without an explicit employment focus (such as conditional and unconditional cash transfers and remittances) tend to result in little to no change in adult labor. The main exceptions are transfers to the elderly and some refugees, who reduce work. In contrast, transfers made for job search assistance or business start-up tend to increase adult labor supply and earnings, with the likely main channels being the alleviation of liquidity and risk constraints. 2018-04-20T13:57:53Z 2018-04-20T13:57:53Z 2018-04 Working Paper http://documents.worldbank.org/curated/en/334251523556191237/The-effects-of-cash-transfers-on-adult-labor-market-outcomes http://hdl.handle.net/10986/29707 English Policy Research Working Paper;No. 8404 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	CASH TRANSFERS LABOR SUPPLY REMITTANCES CONDITIONAL CASH TRANSFERS EMPLOYMENT
spellingShingle	CASH TRANSFERS LABOR SUPPLY REMITTANCES CONDITIONAL CASH TRANSFERS EMPLOYMENT Baird, Sarah McKenzie, David Ozler, Berk The Effects of Cash Transfers on Adult Labor Market Outcomes
relation	Policy Research Working Paper;No. 8404
description	The basic economic model of labor supply has a very clear prediction of what should be expected when an adult receives an unexpected cash windfall: they should work less and earn less. This intuition underlies concerns that many types of cash transfers, ranging from government benefits to migrant remittances, will undermine work ethics and make recipients lazy. This paper discusses a range of additional channels to this simple labor-leisure trade-off that can make this intuition misleading in low- and middle-income countries, including missing markets, price effects from conditions attached to transfers, and dynamic and general equilibrium effects. The paper uses this as a lens through which to examine the evidence on the adult labor market impacts of a wide range of cash transfer programs: government transfers, charitable giving and humanitarian transfers, remittances, cash assistance for job search, cash transfers for business start-up, and bundled interventions. Overall, cash transfers that are made without an explicit employment focus (such as conditional and unconditional cash transfers and remittances) tend to result in little to no change in adult labor. The main exceptions are transfers to the elderly and some refugees, who reduce work. In contrast, transfers made for job search assistance or business start-up tend to increase adult labor supply and earnings, with the likely main channels being the alleviation of liquidity and risk constraints.
format	Working Paper
author	Baird, Sarah McKenzie, David Ozler, Berk
author_facet	Baird, Sarah McKenzie, David Ozler, Berk
author_sort	Baird, Sarah
title	The Effects of Cash Transfers on Adult Labor Market Outcomes
title_short	The Effects of Cash Transfers on Adult Labor Market Outcomes
title_full	The Effects of Cash Transfers on Adult Labor Market Outcomes
title_fullStr	The Effects of Cash Transfers on Adult Labor Market Outcomes
title_full_unstemmed	The Effects of Cash Transfers on Adult Labor Market Outcomes
title_sort	effects of cash transfers on adult labor market outcomes
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/334251523556191237/The-effects-of-cash-transfers-on-adult-labor-market-outcomes http://hdl.handle.net/10986/29707
_version_	1764470029285326848

The Effects of Cash Transfers on Adult Labor Market Outcomes

Similar Items