<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This article analyzes the behavioral effects of cash transfer programs when jobless people need to have access to a minimum consumption level. Our model reconciles recent evidence about negligible or favorable effects of cash transfers on job-finding rates and the more standard view of negative effects. When unemployment compensation, if any, is low enough, we argue that cash transfer programs can raise the hiring probability. Our framework is flexible enough to generate the standard conclusion as well. Looking specifically at unemployment compensation, its optimal level is generally higher than when a lower bound on consumption is ignored.</p></abstract>

This article analyzes the behavioral effects of cash transfer programs when jobless people need to have access to a minimum consumption level. Our model reconciles recent evidence about negligible or favorable effects of cash transfers on job-finding rates and the more standard view of negative effects. When unemployment compensation, if any, is low enough, we argue that cash transfer programs can raise the hiring probability. Our framework is flexible enough to generate the standard conclusion as well. Looking specifically at unemployment compensation, its optimal level is generally higher than when a lower bound on consumption is ignored.

Why Cash Transfer Programs Can Both Stimulate and Slow Down Job Finding

IZA Journal of Labor Economics

This work is licensed under the Creative Commons Attribution 4.0 Public License.

{"article-title":"Why Cash Transfer Programs Can Both Stimulate and Slow Down Job Finding"}

This article analyzes the behavioral effects of cash transfer programs when jobless people need to have access to a minimum consumption level. Our model...

Why Cash Transfer Programs Can Both Stimulate and Slow Down Job Finding

Published Online: Nov 27, 2019

Page range: -

DOI: https://doi.org/10.2478/izajole-2019-0005

Keywords
poverty, unemployment, optimal insurance

© 2019 Juliana Mesén Vargas, Bruno Van der Linden, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Why Cash Transfer Programs Can Both Stimulate and Slow Down Job Finding

Published Online: Nov 27, 2019

Page range: -

DOI: https://doi.org/10.2478/izajole-2019-0005

Keywordspoverty, unemployment, optimal insurance

© 2019 Juliana Mesén Vargas, Bruno Van der Linden, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Keywords
poverty, unemployment, optimal insurance