Welfare Analysis of Changing Notches: Evidence from Bolsa Família

Katy Bergstrom, William Dodds and Juan Rios

American Economic Journal: Economic Policy, 2025, vol. 17, issue 2, 122-61

Abstract: We develop a framework to bound the welfare impacts of arbitrarily large reforms to notches using two sufficient statistics: the change in the number of households located below the new notch and the change in the number of households located below the old notch. Our bounds hold in a wide class of models, highlighting a new way to use reduced-form bunching evidence for welfare analysis without making strong assumptions on the economic environment. We estimate these two statistics using a difference-in-difference strategy for a reform to the antipoverty program Bolsa Família, finding that the reform's MVPF is between 0.90–1.12.

JEL-codes: D12 D91 H83 I32 I38 O12 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Welfare Analysis of Changing Notches: Evidence from Bolsa Família (2022)
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DOI: 10.1257/pol.20230024

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