The long-run effects of cash transfers on labour market outcomes

We study a South African social grant programme that provides unconditional cash transfers to children. Since its introduction in 1998, the age-eligibility threshold for the child support grant was progressively extended from children under 7 to children under 18. Making use of household survey data, we use a difference-in-difference identification strategy that exploits the variation in grant eligibility across age groups generated by these age-eligibility changes to study how cash transfers in childhood can affect long-run labour market outcomes. We find that childhood grant eligibility has no effect on labour market participation, employment and wages in young adulthood. We do find evidence of a negative effect on male labour market participation and wages.