Journal of Population Economics

, Volume 26, Issue 4, pp 1255–1284 | Cite as

Welfare programs and labor supply in developing countries: experimental evidence from Latin America

  • María Laura Alzúa
  • Guillermo Cruces
  • Laura Ripani
Original Paper

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 Programa Nacional de Educación, Salud y Alimentación (PROGRESA), Nicaragua’s Red de Protección Social, and Honduras’ Programa de Asignación Familiar. 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 

Notes

Acknowledgements

This study is based on a background paper entitled, “Labor supply responses to conditional cash transfer programs. Experimental and non-experimental evidence from Latin America,” prepared for the Inter-American Development Bank. The authors wish to thank Santiago Levy for encouraging them to work on this study and Emanuel Skoufias for providing an early draft of his ongoing work. The authors also acknowledge financial support from the CEDLAS-IDRC research project on “Labor markets for inclusive growth in Latin America.” The editor, Erdal Tekin, and an anonymous referee provided valuable feedback. Comments by Felipe Barrera, Sami Berlinski, César Bouillon, Sebastián Galiani, Laura Guardia, Pablo Ibarrarán, Miguel Jaramillo, Julia Johannsen, Santiago Levy, Florencia López Boo, Craig McIntosh, Claudia Piras, Patrick Puhani, Graciana Rucci, Norbert Schady, Guilherme Sedlacek, Ana Santiago, and Yuri Soares are much appreciated. We also gratefully acknowledge the comments received from the participants at the 13th Annual Meeting of the Latin American and Caribbean Economic Association in Rio de Janeiro in 2008, at the AfrEA-NONIE-3ie Impact Evaluation Conference in Cairo, held in April 2009, and at annual conference of the North East Universities Development Consortium held in 2009. Andrés Ham and Nicolás Epele provided outstanding research assistance. The usual disclaimer applies.

The opinions expressed in this report are those of the authors and do not necessarily represent those of the institutions to which they belong.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  • María Laura Alzúa
    • 1
    • 2
  • Guillermo Cruces
    • 1
    • 2
    • 3
  • Laura Ripani
    • 4
  1. 1.CEDLAS, Centro de Estudios Distributivos, Laborales y Sociales, Facultad de Ciencias EconómicasUniversidad Nacional de La PlataLa PlataArgentina
  2. 2.CONICETBuenos AiresArgentina
  3. 3.IZABonnGermany
  4. 4.Labor Markets and Social Security Unit (LMK)Inter-American Development Bank (IDB)WashingtonUSA

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