Conditional Cash Transfers, Payment Dates and Labor Supply: Evidence from Peru

Fernando Fernandez and Victor Saldarriaga
Universidad de Piura and Peruvian Ministry of Social Development and Inclusion

Using a randomized controlled trial of a large-scale publicly run micro-entrepreneurship program in Chile, we assess the effectiveness of business training and asset transfers on individuals’ employment and income. About half of the participants had not yet started their businesses at intervention, allowing us to study the program effects by baseline economic activity. To analyze the shape of the production function, two levels of asset transfers are allocated. We find that the program does significantly increase individuals’ employment and income by 18% and 32% respectively after one year and significantly improves the business practices of its beneficiaries. The program seems more effective for individuals who are unemployed at the beginning of the program, followed by the selfemployed at the baseline. The effect on wage earners is positive only for low-income individuals. This is consistent with the presence of fixed costs. The additional transfer of assets has a positive and significant effect on employment and self-employment. However, the additional transfer does not have a statistically significant effect on labor and household income, consistent with rapidly decreasing returns in the production function.







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