The impact of government income transfers on the Brazilian job market

Abstract

This paper intends to analyze the impact of transferences over the formal and informal labor supply from the family heads. For the analyze of the effects in scope of the entrance decisions in job market it was estimated a multinomial logit, while in the scope of the working time it was used a variation of the method of Durbin and McFadden (1984) for selection bias correction. It has verified that transferences have positive effect over the probabilities that the individual doesn't work and does informally work. However, this last one seems to be related to a substitution effect, once it has been observed a parallel negative effect over the probability to work on the formal sector. It has been obtained yet that the benefits negatively impacts on the offered hours by the family heads whether in the formal or non-formal sector, effect that has happened to be verified on the hours offering in formal sector of all individuals. On the other hand, as we consider the hours of working of those who are engaged in informal sector, it has obtained that income transferences perform not as a discourage issue but as a magnifier factor of worked hours.

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