Munich Personal RePEc Archive

The long-term effects of cash transfers on education and labor market outcomes

Paredes, Tatiana (2017): The long-term effects of cash transfers on education and labor market outcomes.

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Abstract

This paper investigates whether the effects of a cash transfer program persist or wear off in the long-run. I study the first two phases of Bono de Desarrollo Humano (BDH) in Ecuador, each of which lasted about five years. I use a regression-discontinuity design and a change in the eligibility rule at the beginning of the second phase of the program to disentangle the effects of a short- versus long-exposure to the program. Most of the gains in enrollment and schooling were achieved in the short-run among children that started treatment when they were about to start elementary school, eleventh grade or Baccalaureate. However, an extended exposure to BDH was not enough to keep raising children’s education. Regarding labor market outcomes, BDH had a negative (not statistically significant) impact on the probability of working among young children but did not increase job opportunities among young adults in the long-run.

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