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

Abstract

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 to be 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.