The long-term impact of (un)conditional cash transfers on labour market outcomes in Ecuador

Abstract

Despite the widespread implementation of conditional cash transfers in low- and middle-income countries, evidence on their long-term effects remains limited. This paper evaluates the impact of Ecuador's Human Development Grant on the formal labour market outcomes of children from eligible households. The programme, one of the first of its kind, was characterised by weak enforcement of its eligibility criteria. Using a regression discontinuity design, we find that the grant increased the probability of working in the formal sector by almost 13\% around 15 years after exposure, thereby helping to curb the intergenerational transmission of poverty. This positive effect is most likely to operate through human capital accumulation.