Do benefit recipients change their labor supply after receiving the cash transfer? Evidence from the Peruvian Juntos program

Abstract

We investigate the short-term labor supply responses to a Conditional Cash Transfers program in Peru. Rather than comparing treated and non-treated households, we examine how benefit recipients change their labor supply after receiving the cash transfer. Our empirical strategy exploits exogenous variation in the distance between the program’s payment schedule and interview dates from the Peruvian National Household Survey. Results suggest that cash recipients reduce their labor supply by 6–10 hours in the week following the payment date. This reduction in hours of work is larger for married women and for mothers with children aged 5 or less. In addition, results are robust to different specifications, changes in the sample and a placebo test. JEL codes: 138, J22