This paper seeks to examine if the Bolsa Família program, which targets poor families and subsidize them, increases the probability of starting a new venture. The author indicates that conditional cash transfers are responsible for the recent decrease in inequality conditions in developing countries. This being said, the author attempts to observe the potential effects of CCT’s on three channels: alleviation of wealth constraints, insurance against bad outcomes of risky activities, and reduction of labor supply of children. The data is extracted from the national household survey for 2004 and 2006.
The paper is structured as follows: After a brief introduction, section two presents a simple model that motivates each of these potential channels. Subsequently, section three presents the data and empirical strategy. Afterwards, section four presents results, followed by decomposition and robustness analysis in section five. Finally, section six delivers the conclusions.
The author concludes that:
entrepreneurship is indeed stimulated by the program in urban areas through the insurance and wealth constraint alleviation effects
the program stimulates self employment; if this is regarded as a higher productivity activity, then Bolsa Família might have a positive long term effect, more than just offering short term poverty relief
conditionality seems not to have an impact on the level of entrepreneurship
the program challenges the view that employer status is inherently superior to self-employment, especially among the poor