Decomposing the Effects of CCTs on Entrepreneurship

Abstract

This note assesses whether Bolsa-Família increases the probability of starting a venture in Brazil by decomposing its potential effects into three channels: wealth-constraint alleviation, insurance provision, and reduction of children’s labor supply (through the effect of the conditionality). Results are that entrepreneurship is indeed stimulated by Bolsa-Família in urban areas through the insurance and wealth-constraint alleviation effects, notwithstanding that new ventures are typically secondary sources of income. The conditionality seems not to impact the level of entrepreneurship. Hence, Bolsa-Família might have a positive long-term effect as well, instead of just offering short-term poverty relief.CCTs, conditional cash transfers, entrepreneurship, Bolsa-Familia, Brazil, wealth, insurance, children, labor, developing countries