Welfare Effects of a Permanent Unconditional Cash Transfer Program: Evidence from Maricá, Brazil

Sidhya Balakrishnan, Roberta Costa, Johannes Haushofer and Fábio Waltenberg ()

No 33089, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the impact of a permanent unconditional cash transfer called “Citizen’s Basic Income” in the city of Maricá, Brazil. At the time of the study, the program made monthly household-level transfers of USD 180 PPP on average to about a fourth of the city’s residents. The program is unique in that it is both unconditional and permanent, while existing programs typically only have one of these features. Between September 2021 and April 2022, we surveyed 5,182 individuals, about half of whom received the RBC. We use propensity score matching with inverse probability weights to create a matched comparison group and estimate the effect of the program on economic, social, and psychological outcomes. Our results reveal several positive welfare effects. Household income including transfers increased by 9%; consumption at the per capita level did not change significantly, but the household as a whole experienced a consumption increase of 5%. We also observe improvements in an index of children’s health and education, although the effect does not survive multiple inference correction and bounding. There was a notable displacement of other income sources, particularly labor income, which decreased by 17% among recipients, suggesting shifts to lower-paying but potentially more desirable jobs during the pandemic. The program also led to increased access to financial services, but decreased the propensity to save. These findings paint a nuanced picture of the socioeconomic benefits of unconditional cash transfers and established cash transfer administrative systems.

JEL-codes: H3 O12 O23 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-hea and nep-pbe
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