Turns out the thing stopping people from working was being too sick and too hungry to work.
What happened
A study of Brazil's massive cash transfer program found that giving more money to the extremely poor increased their employment by 5%. It also sharply improved their health, cutting hospitalizations by 8% and deaths by 14%.
Why it matters
For decades, a major argument against giving cash to the poor was that it would make people stop working. This paper provides strong evidence that the opposite is true. It suggests that cash transfers can actually boost employment and improve public health, by removing basic subsistence and health barriers.
The signal
Development agencies currently using labor-supply disincentive models to means-test or cap transfer programs will face pressure to rerun their welfare calculations, probably within the next grant cycle.