The Impact of Sustained Unconditional Cash Transfers on Labor Market Outcomes

University Of Chicago, Chicago IL

Investigators

Abstract

This research project will use a large data set and experimental methods to investigate the medium and long-term effects of unconditional cash transfers on labor market outcomes such as time use, job search, motivation, and worker bargaining power. Policymakers across the globe increasingly use unconditional cash transfers as mechanisms for promoting economic mobility and poverty reduction. However, the long-term impacts of these programs, including what happens when transfers end, remain insufficiently studied. Understanding how unconditional cash transfers impact time use, job search, motivation, and worker bargaining power is necessary for projecting the long-run impacts of cash transfers, determining the overall effects of cash transfers, and using the estimates to formulate labor market policies. A unique aspect of this study is the combination of a large data set and an innovative research design that allows the researchers to answer many questions that have not been answered before. This research therefore makes important contribution to economic science. The results of this research project will provide important inputs into labor market and poverty reduction policies as well as establish the US as the global leader in these areas. This project leverages an existing privately funded randomized control trial on unconditional cash transfers, collect additional data at more frequent intervals and also use field experiments to study how cash transfers affect: (i) job quality; (ii) time use; (iii) inputs to long-run labor market outcomes; (iv) labor market outcomes when cash transfers end. This study combines experimental variation in unconditional cash transfers with unique data on job search, job satisfaction, time use, human capital accumulation, and negotiation with employers and standard data on wages, benefits, and employment to draw causality. The PIs have detailed data about participants from administrative records, survey data, passively collected mobile phone data covering a wide array of variables, thus allowing for a nuanced understanding of labor supply decisions in the context of other choices workers face. By collecting high frequency data on individual characteristics, outcomes, and behaviors that have been unobservable in existing studies, experimentally assigning treatment, and carefully accounting for differential attrition, this study will make important contributions to the literature on unconditional cash transfers. The results of this research project will provide important inputs into labor market and poverty reduction policies as well as establish the US as the global leader in these areas. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.