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The stereotype of the lazy welfare recipient has often been deployed by politicians and others, in the U.S. and abroad, to reduce popular support for public assistance. But a new paper co-authored by Rema Hanna, Jeffrey Cheah Professor of South-East Asia Studies at Harvard Kennedy School (HKS), debunks the stereotype. It finds that government cash transfer programs by and large do not discourage work for disadvantaged citizens, at least in the developing world.
The debate over the merit of such programs is growing more intense as they become increasingly common. Hanna and her fellow researchers cite the fact that governments in at least 119 developing countries now operate at least one type of unconditional cash assistance program, affecting up to one billion people.
To test the impacts of these programs, the research team examined data from seven randomized controlled trials of government cash transfer programs in six developing countries – Honduras, Indonesia, Morocco, Mexico, Nicaragua, and the Philippines.
“Across the seven programs, we find no observable impacts of the cash transfer programs on either the propensity to work or the overall number of hours worked, for either men or women. Pooling across the five comparably designed studies to maximize our statistical power to detect effects if they exist, we again find no observable impacts on either work outcome,” the authors write. “In short, despite much of the rhetoric that cash transfer programs lead to a massive exodus from the labor market, we do not find overwhelming evidence to support these claims.”
The paper is co-authored by Abhijit Banerjee, Gabriel Kreindler and Benjamin A. Olken, all of whom are at MIT.
Rema Hanna, Jeffrey Cheah Professor of South-East Asia Studies
"Despite much of the rhetoric that cash transfer programs lead to a massive exodus from the labor market, we do not find overwhelming evidence to support these claims," the authors write.