Seminar: Cash transfers and labor supply: New evidence on impacts and mechanisms

The study finds that Vietnam's national cash transfer program does not reduce labor supply but rather shifts adults from self-employment to wage-paying jobs, likely due to older adults taking on more housework and childcare responsibilities.

We study the impact of a national cash transfer program in Vietnam on labor supply using large household surveys and a regression-discontinuity design based on discontinuity in age eligibility. We do not find evidence of a disincentive effect of the cash transfer on labor supply for adults aged 15-64. More importantly, we find robust evidence that the transfer program causes the adults to move from self-employed non-farm work to wage-paying jobs. A likely mechanism is that the transfer program reduces the labor force participation of older people, and they help housework and childcare for younger adults to have wage-paying jobs.