Are Bolsa Família beneficiaries lazy? – 03/04/2023 – Pablo Acosta

The perception that social programs are a trap that discourage work and condemn families to eternal poverty is not supported by evidence, as we have discussed in another column here.

Even so, this false dilemma continues to be the basis for the formulation of public policies in Brazil.

According to a recent study by the World Bank, beneficiaries of social programs in Brazil work as much or more than non-beneficiaries.

The majority of adult Bolsa Família (BF) beneficiaries participate in the labor market, even with low pay and low job quality. In 2019, 34 million adults —nearly 30% of those who could be considered able to work in Brazil— lived below the poverty line.

Within this group, BF adults were more likely to be in the labor force (70%) and to be employed (57%) compared to other poor individuals who did not receive the program.

However, these beneficiaries were likely to work in informal salaried jobs (40%) or in informal self-employed jobs (32%), earning very low or unpaid wages—41%.

Among Bolsa Família beneficiaries who remained outside the workforce, there is a predominance of women (80%), the vast majority with children, indicating the existence of other barriers, such as domestic chores, lack of day care, low availability of full-time education.

It is also a myth that all income transfer beneficiary families remain in the program forever.

The study followed families that entered the BF in 2012 through 2019. The results indicate that there is a huge variation in “survival” in the program. For example, 23% of families spend less than three years and 40% spend more than seven years receiving the benefit. The length of stay in the program is mainly associated with the ability to enter the formal job market. This, in turn, is highly correlated with individual factors and context, especially educational level and professional experience.

In addition, exit from the program is greater among adults with fewer restrictions on labor supply, such as fewer young children or more adults able to work from home. Finally, the municipal context is important: urban areas show a faster exit than rural areas.

Another myth is that there is a revolving door and that families are in and out of the program all the time. Only 12% of the studied families left the program and returned to the BF during the observed period. Of these, 7% returned to BF only once and 5% did so twice in the eight years of the study.

It is important to emphasize that the return to the program is motivated not only by individual circumstances but by the availability of vacancies in the program, which in many moments was unable to meet all the demand.

Exit rates also varied according to the demographic structure of households. Those with older children were the most likely to drop out by 2019 and were also the most affected by program management practices. Cumulative exit rates steadily increased between 2012 and 2016 and then declined. Families with children are less likely (59%) to leave BF in five years than families without children (72%). Exit rates reach 80% among households that have only children over 12 years of age, that is, those who were closer to adulthood at the time of entry.

A specific feature of Bolsa Família is its exit rule. BF beneficiary families have the possibility to maintain most of their benefits for up to two years, even if their income increases above the eligibility limit. This concession, called Regra de Permanência (RP), is only available if families voluntarily update their income information in the Single Registry and provided that the family’s income remains below half the minimum wage per capita. In addition to the RP, families can also voluntarily withdraw from the program, maintaining the right to be readmitted if their income drops again (a rule called Guaranteed Return).

The dynamics of entries and exits from the program demonstrate another Brazilian specificity: conditional cash transfers have become unemployment insurance for the informal, low-income self-employed and long-term unemployed. In 2019, there were more unemployed people supported by BF than by traditional unemployment insurance.

The program does not imprison its beneficiaries, and the exit rules encourage labor participation. The problem is that the transfer program is fulfilling other functions for which it was not designed, and vulnerable groups urgently need support to increase their productivity in the labor market.

Some measures can help to level the conditions of access to the labor market and improve the quality of jobs for poor workers.

For example: (i) providing childcare, full-time teaching and removing other restrictions on women with young children entering the labor market; (ii) support the completion of secondary, technical, vocational education and entry into higher education, as formal education is essential for access to formal jobs; (iii) expanding the menu of programs to support the skills and employability of the poor, as well as supporting entrepreneurship and strengthening intermediation mechanisms; (iv) improve unemployment insurance tools to make them available to a wider range of beneficiaries; (v) expand actions that allow formal professional experience for younger people, such as internships, apprenticeships and first jobs; (vi) ensure that the Rule of Permanence continues to be relevant and that there is no waiting list to enter Bolsa Família.

Therefore, the question that needs to be asked is not whether social programs make beneficiaries lazy, but what Brazil is doing to offer employability to the poorest.

_{Column written in collaboration with my colleagues at the World Bank Josefina Posadassenior economist, and Tiago Falcãoconsultant.}

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