Youth Responses to Cash Transfers: Evidence from Brazil

Identifying successful interventions for disadvantaged youth has recently proven challenging. This paper examines the effectiveness of cash assistance targeted to this group. We exploit an exogenous variation in the... [ view full abstract ]

Identifying successful interventions for disadvantaged youth has recently proven challenging. This paper examines the effectiveness of cash assistance targeted to this group. We exploit an exogenous variation in the provision of cash transfers in Brazil to credibly identify how an additional year of exposure at the critical age of 18 impacts on educational, labor market, and economic selfsufficiency outcomes. We use individual-level administrative data of the largest conditional cash transfer program in the world and link them to educational and formal labor market records. We do not find any evidence of significant effects of additional exposure to the program on educational attainment or an increase in economic self-suffciency. We alternatively find evidence of behavioral responses in formal labor supply. We find a 2.1-4.4 percentage points decrease in the probability of work in the formal sector. However, this negative effect tends to fade away over time. Overall, our findings support the skepticism about the effectiveness of interventions for disadvantaged youth.