Cash Transfers and Productive Inclusion: Evidence from Bolsa Familia
(with Felipe Lobel and Valdemar Neto)
We study how cash transfers affect work and health. Exploiting an increase in the generosity of the world's largest cash-transfer program for the extremely poor, we show that the reform raised employment by 5 percent while sharply improving health: hospitalization fell 8 percent and mortality 14 percent, saving roughly 1,000 lives. These findings challenge the view that transfers reduce work. Instead, transfers can relax binding subsistence and health constraints, raise productivity, and expand labor supply. We formalize this mechanism in a model of productive inclusion and use it to evaluate welfare, yielding lessons for antipoverty policy design in low-income settings.