We estimate the macroeconomic effects of Brazil’s Bolsa Familia cash transfer program on state-level GDP and employment. Using a Bartik identification strategy over 2004–2019, we find a large and persistent relative multiplier: a state receiving extra transfers worth 1% of GDP grows 2–3 percentage points more than others, with effects concentrated in non-tradable sectors. Informal employment increases significantly while formal employment does not, leaving total employment little changed. The large GDP multiplier therefore reflects higher labor productivity. An open-economy New Keynesian model with no wealth effects on labor supply matches the GDP multiplier but misses the employment impacts.
Suggested citation:
Mendes, Arthur, Wataru Miyamoto, Thuy Lan Nguyen, Steven Pennings, and Leo Feler. 2026. “The Macroeconomic Effects of Cash Transfers: Evidence from Brazil.” Federal Reserve Bank of San Francisco Working Paper 2024-02. https://doi.org/10.24148/wp2024-02