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Labor Supply Effects of a Universal Cash Transfer

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  • Gromadzki, Jan

    (Vienna University of Economics and Business)

Abstract

I investigate the labor supply effects of the introduction of a large unconditional cash benefit. I exploit the unique design of the child benefit program in Poland to identify the income effects of the monthly transfer in a difference-in-differences design. On average, the marginal propensity to earn out of unearned income was equal to -0.14. For every extra 100 dollars in monthly child benefit transfers households receive, they spend 43 dollars on consumption and save 43 dollars. Additional evidence shows that the program had a positive impact on investments in human capital and home production efficiency.

Suggested Citation

  • Gromadzki, Jan, 2023. "Labor Supply Effects of a Universal Cash Transfer," IZA Discussion Papers 16186, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16186
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    References listed on IDEAS

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    Cited by:

    1. Gromadzki, Jan, 2024. "Universal Child Benefit and Child Poverty: The Role of Fertility Adjustments," IZA Discussion Papers 17456, Institute of Labor Economics (IZA).
    2. Jan Gromadzki & Katarzyna Sałach & Michał Brzeziński, 2024. "When populists deliver on their promises: the electoral effects of a large cash transfer programme in Poland," Economica, London School of Economics and Political Science, vol. 91(361), pages 320-345, January.

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    More about this item

    Keywords

    poverty; child benefit; labor supply; income effects; unconditional cash transfer; difference-in-differences;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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