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How much is too much: Does the size of income support transfers affect labor supply?

Ervin Prifti, Elisenda Estruch, Silvio Daidone () and Benjamin Davis

Journal of Policy Modeling, 2019, vol. 41, issue 1, 179-196

Abstract: Cash transfer programs pursue mainly protective objectives, but can also impact rural livelihoods by inducing investments in productive activities and changing household labor allocation. We adopt a continuous treatment approach to quantify how households’ labor supply responds to transfer size. We find a shift from paid labor to own farm labor and find that the transfer size is well within a level that would have disincentive effects on time spent on own farm activities. The switch from paid to own farm labor occurs at lower levels of transfers for labor-constrained households, and at higher levels for non-labor constrained households.

Keywords: Cash transfers; Labor supply; Continuous treatment approach; IPW-regression (search for similar items in EconPapers)
JEL-codes: C21 J22 H24 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:jpolmo:v:41:y:2019:i:1:p:179-196