IN-KIND TRANSFERS IN BRAZIL: HOUSEHOLD CONSUMPTION AND WELFARE EFFECTS

Abstract

The Worker Food Program (Programa de Alimentação do Trabalhador - PAT) creates tax incentives for firms to provide more than 20 million Brazilian workers with in-kind transfers. They are usually distortive compared to cash transfers, but this is not clear when the latter, when paid by the employer, are subject to payroll taxes like in Brazil. Using propensity score analysis, we find evidence that the PAT increases poor households' food consumption between 15.7% and 25.0% compared to cash transfers. This result, however, may not be improving workers' nutrition, as sought by the program.