The Impact of Conditional Cash transfers on labour supply: new evidence from Brazil’s Bolsa Familia

This paper re-examines the labour market effects of Brazil’s Bolsa Familia using nine waves (2001–2009) of individual-level PNAD data and a fixed effects strategy that controls for census-tract unobservables, state-year shocks and tract-specific trends. In contrast to earlier tract-average studies, the individual specification reveals no significant change in aggregate labour force participation or weekly hours. Beneath this neutral mean, however, clear heterogeneity emerges: employment rises for women, for non-white adults and in rural areas, while a small but significant shift from formal to informal jobs is observed among urban men close to the eligibility threshold. The pattern is consistent with liquidity and child-substitution channels outweighing pure income effects, while the sharp means-test creates incentives for marginal formal workers to conceal earnings. Overall, Bolsa Familia does not discourage work; instead, it modestly expands employment among disadvantaged groups. These findings reinforce the programme’s value as a poverty-reduction and labour-activation tool, thereby supporting the UN Sustainable Development Goals related to inclusive growth and effective social protection.