The Lasting Labor-Market Effects of Cash Transfers - Evidence from South Africa’s Child Support Grant

Jul 19, 2026

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Unconditional cash transfers can generate durable labor-market effects, but evidence for adult recipients in developing countries remains limited. This study uses discontinuous exposure to South Africa’s Child Support Grant for mothers of children born one year apart to measure short- and long-term impacts of an income shock of about $400. In the short run, recipients are more likely to be active and search for work. After five years, employment rates and occupation types are broadly similar, aside from reduced agricultural work.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages21

Reading Time53 min

Introduction

Job quality and labor-market frictions

Research question and policy relevance

Identification strategy

Eligibility variation across birth cohorts

Estimating impacts during and after receipt

Main findings

Job search and activity in the short run

Employment and occupation composition five years later

Pub lic Disclosure Authorized Pub lic Disclosure Authorized The World Bank Economic Review, 36(4), 2022, 934–954 [https://doi.org10.1093/wber/lhac014](https://doi.org10.1093/wber/lhac014) Article The Lasting Labor-Market Effects of Cash Transfers: Evidence from South Africa’s Child Support Grant Alessandro Tondini Abstract Can unconditional cash transfers have long-term benefits for women’s employment in developing countries? This study exploits discontinuous exposure to the South African Child Support Grant for mothers whose children were born one year apart to identify the short-and long-term effects of a positive income shock of roughly $400 ($650 PPP in 2010) . In the short term, there is a considerable increase in the probability of being active and looking for a job. Five years after receiving the transfer, mothers who benefited for one year are as likely tobe employed as those who never received it; the type of occupation is also similar, other than a small decrease in work in the agricultural sector. Overall, the grant appears to facilitate job search for single mothers in the presence of high search costs, but does not significantly change job prospects. JEL classification: O12, H53, I38, J64, J22, J4 Keywords: unconditional cash transfers, job quality, unemployment, South Africa 1. Introduction Improving access to good jobs is a key issue in the labor market of developing countries, where a significant portion of the workforce is often employed in low-quality, subsistence-level jobs. The broad concept of“job quality”is then particularly relevant, as simple measures of employment (and unemployment) may bea poor indication of labor-market performance. In these contexts, a fundamental question is to what extent unemployment and low-quality jobs are the result of frictions and barriers in the labor market, which could be addressed by specific policies. For example, the presence of search frictions, as a result of high search costs, would suggest that an income shock that relaxes liquidity constraints for the unemployed may result in persistent benefits in both the quantity and quality of jobs. This could be achieved by cash transfers, a widespread policy instrument in developing countries. However, empirical evidence on whether these types of programs can lead to lasting improvements in the labor-market outcomes of adult recipients is still very limited. Alessandro Tondini is a researcher at the FBK-Research Institute for the Evaluation of Public Policies (IRVAPP), in Trento, Italy; his email address is [atondini@irvapp.it. The](atondini@irvapp.it. The) author thanks Luc Behaghel for guidance throughout this project, the coeditor and two anonymous referees for insightful comments that significantly improved the paper, alongside Abhijit Banerjee, Matteo Bobba, Patrizio Piraino, Ingrid Woolard, Denis Cogneau, Paolo Falco, Jonathan Lehne, Son Thierry Ly, Karen Macours, and Liam Wren-Lewis, as well as seminar participants at the Paris School of Economics, European University Institute, the University of Cape Town, the IZA Labor & Development workshop, the Oxford Development Workshop, and conference participants at the CSAE 2017, CEPR/PODER Final conference, EEA 2018, and 3rd Zurich Conference on Public Finance in Developing Countries. A supplementary online appendix is available with this article at The World Bank Economic Review website. © The Author(s) 2022 . Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. For permissions, please e-mail: [journals.permissions@oup.com](journals.permissions@oup.com) Downloaded from [https://academic.oup.com/wber/article/36/4/934/6702371](https://academic.oup.com/wber/article/36/4/934/6702371) by Sectoral Library Rm MC-C3-220 user on 10 December 2023 In order to shed more light on the topic, this paper analyzes the labor-market effects of a child grant ina dynamic w

FAQs

What long-term question does the paper address?

Whether unconditional cash transfers can produce lasting benefits for women’s employment in developing countries, beyond short-run changes in job search behavior.

How does the study identify the effects of the Child Support Grant?

It exploits exogenous eligibility differences across children’s birth cohorts caused by sudden reforms to the age requirement, comparing mothers who received the grant for about one year.

What are the main labor-market effects found after five years?

Recipients’ employment likelihood is similar to those who never received the grant, and occupation types are largely unchanged, with a small decrease in agricultural-sector work for single mothers.

Jul 19, 2026

Upload by Liam