Bolsa Família and formal employment: evidence from Brazilian municipalities

Advisor: Pedro Carvalho Loureiro de Souza

Co-advisor: Eduardo Zilberman

In this paper we study the impact of Bolsa Família’s CCTs on the number of formal jobs at the municipality level. We find a highly heterogeneous effect across municipalities. Previous works on this topic considered only the effect on the average municipality. We show evidence that the program’s effect can be five times higher on the poorest municipalities, corresponding to 1% increase in formal jobs for a 10% increase in the number of beneficiaries. To accomplish so, we combine administrative data on the program enrollment with data on the universe of formal jobs. This allows us to overcome the problem of measurement error in the treatment variable. Robustness checks indicate that the effect remains significant after controlling for health, educational, climatic shocks, financial and political factors.