Decomposing the Effects of CCTs on Entrepreneurship
Conditional cash transfers boosted a major reduction in poverty and a significant decrease in inequality in developing countries over the past decade. However, their success in promoting economic development is challenged by the claim that they dea...
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| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101109085644 http://hdl.handle.net/10986/3951 |
| Summary: | Conditional cash transfers boosted a
major reduction in poverty and a significant decrease in
inequality in developing countries over the past decade.
However, their success in promoting economic development is
challenged by the claim that they deal with short-term
poverty relief without providing the poor with the tools for
breaking away from poverty by their own means. This claim,
however, could be dismissed if conditional cash transfers
had an effect on entrepreneurship. This paper assesses
whether Bolsa-Familia increases the probability of starting
a new venture in Brazil, decomposing its potential effects
into three channels: alleviation of the wealth constraint,
insurance against negative outcomes of risky activities, and
reduction of the labor supply of children (through the
effect of the conditionality). The effect of each of these
channels is separately estimated using data from National
Household Surveys in 2004 and 2006, for which the households
of transfer beneficiaries can be identified. The results
indicate that entrepreneurship is indeed stimulated by the
program in urban areas throughout the insurance and wealth
constraint alleviation effects, notwithstanding that new
ventures are typically secondary sources of income. Finally,
the conditionality seems not to have an impact on the level
of entrepreneurship. |
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