A study conducted on a South African social grant program has explored the long-term effects of cash transfers on labor market outcomes. The program, which began in 1998, provides unconditional cash transfers to children and has gradually extended its age-eligibility threshold from children under 7 to those under 18.
Researchers used household survey data and employed a difference-in-difference identification strategy. This approach took advantage of the variation in grant eligibility across different age groups resulting from changes in the age-eligibility criteria. The aim was to assess how receiving cash transfers during childhood might influence labor market outcomes later in life.
The findings reveal that eligibility for the childhood grant does not impact labor market participation, employment, or wages during young adulthood. However, there is evidence indicating a negative effect on male labor market participation and wages.