Does Local Employment Growth Accelerate Exits From Social Assistance? Evidence From Brazil’s Conditional Cash Transfer Bolsa Familia

A large literature highlights the need for low- and middle-income countries to establish adaptive social safety nets responsive to labor market shifts. While much is known about safety nets' expansion during downturns, less is understood about their response to labor market recoveries. This paper examines how municipal formal employment affects the likelihood of families exiting Bolsa Familia, Brazil's means-tested cash transfer program. Survival analysis reveals that families exiting the program tend to have better-educated household heads, live in urban areas, and have fewer children. Fixed-effects estimation, combined with a shift-share instrument, shows that local employment growth leads to a small but statistically significant increase in the probability of exiting Bolsa Familia. A 10% growth in local employment raises the exit probability by 0.342 percentage points, increasing the average transition rate from 8.61% to 8.69%. These effects are concentrated in households with spare labor supply.