Cash transfers and formal employment: Brazil’s Bolsa Família Program

Abstract

This paper examines the heterogeneous
relationship between Brazil’s Bolsa Família
Program (BFP) and formal employment. Using
municipal-level data from 2014 to 2020 and
two-way fixed effects panel data models, we
analyze how increases in transfers are associated
with changes in formal employment across
gender, race, and economic sectors. We find
that increases in the number of BFP beneficiaries correlate with an overall decline in formal
employment for both men and women, with a
more pronounced influence on Black workers.
Conversely, increasing the value of BFP transfers positively influences formal employment,
especially among Black workers. We also find
that these associations are sector-dependent,
leading to a reduction in employment in the
primary sector and an increase in the service
sector. These results suggest that increasing
BFP transfer values, instead of expanding the
number of recipient families, could have more
positive effects on formal employment, particularly Black workers.