Child labor and conditional cash transfer program: an analysis of Bolsa Familia impact on urban and rural areas in Brazil

Abstract

The aim of this paper is to study the effect of the “Bolsa Família’’ conditional cash transfer program on the extensive margin (participation into the labor force) and intensive margin (intensity of work on the job) of child labor in Brazil. For this purpose, we use data from the Brazil Demographic Census 2010 and the Lewbel’s estimator (2012) approach. This method allows the build of endogenous instruments from the heteroscedasticity of the error term. Thus, This empirical approach addresses the problem of endogeneity in the choice of participation in the program (treatment). We discuss that, the common finds in the literature may be biased, because of the non-treatment of this endogeneity problem. The Lewbel’s estimator results show that on the extensive margin the “Bolsa Família” Program reduce child labor. This result reinforces the hypothesis that omitted variables may be biasing the results of studies of the impact of this program on child labor. Regarding the intensive margin, we found that among the families that receive the cash transfer from the program there is an increase on the number of hours worked by the children. We suppose that the heterogeneity of the results between the intensive and extensive margins may be related to the performance of the income and substitution effects on the child labor decision by the parents and the possible effect of their preferences.