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Welfare Analysis of Changing Notches: Evidence from Bolsa Família

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  • Bergstrom,Katy Ann
  • Dodds,William
  • Robles Rios,Juan Carlos

Abstract

This paper develops a framework to bound the welfare impacts of reforms to notches using twosufficient statistics: (1) the number of households bunching at the old notch who move toward the new notch, and (2) thenumber of households who “jump” down to the new notch. The bounds hold in a wide class of models, highlighting a newway to use reduced-form bunching evidence for welfare analysis without strong assumptions on the economicenvironment. These two statistics are estimated using a difference-in-difference strategy for a reform to theanti-poverty program Bolsa Famılia, finding that the reform’s marginal value of public funds lies between 0.90and 1.12.

Suggested Citation

  • Bergstrom,Katy Ann & Dodds,William & Robles Rios,Juan Carlos, 2022. "Welfare Analysis of Changing Notches: Evidence from Bolsa Família," Policy Research Working Paper Series 10117, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10117
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    References listed on IDEAS

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