🥱 No laziness effect

Hello! Welcome to another edition of the Brazil Society newsletter! This week, we’re talking about a long-lasting debate about the effects of cash transfers on people’s willingness to work. 

If you have any questions about this newsletter, or topics you’d like to see covered in future issues, you can reach me at [email protected]

Cash transfers do not make for lazy workers

Over its 21-year history, Brazil’s flagship income transfer program Bolsa Família has emerged as a global model, lauded for its positive impact on social development and its broad economic benefits, including job creation. Economists have cited its success in lifting millions out of poverty and its role as a stabilizing force in one of the world’s most unequal societies.

Critics’ concerns that cash transfers might discourage recipients from working — long referred to as the “laziness effect” — have been repeatedly debunked. In Brazil and abroad, extensive research has shown no evidence to support such claims.

But the program’s dramatic expansion during the Covid pandemic has reignited a contentious debate. With the government significantly increasing the number of beneficiaries and the value of the monthly transfers, some question whether the changes might now have unintended consequences for the labor market.

Marcelo Neri, director of the Getulio Vargas Foundation’s Center for Social Policies (FGV-Social) and a leading authority on Bolsa Família, urges caution in drawing conclusions. “It’s still too early to say,” he told The Brazilian Report, emphasizing that the discussion must account for recent program adjustments and other evolving public policies.

Increased transfers did not lower labor participation rates

A recent study by the Institute of Applied Economic Research (Ipea) reveals a modest but meaningful rise in employment rates among households receiving Bolsa Família benefits, increasing from 46.3% in 2019 to 46.8% in 2023, largely driven by formal jobs. The findings challenge the notion that enhanced cash transfers discourage work.

“What Bolsa Família does is raise the wages asked by the poorest,” said Marcos Hecksher, the study’s author, in a recent interview. “Beneficiaries stop accepting excessively precarious conditions and begin demanding less degrading wages for their labor.”

Neri underscores a notable improvement in labor market dynamics for the bottom half of workers, citing a 10.55% increase in overall income in Q3 2024, compared with the same period a year earlier, pushed by a 4.1% rise in employment (formal and informal). Both metrics significantly outpace the overall market's growth, which registered gains of 6.98% in income and just 1.66% in employment.

This uptick marks a pivotal shift, reversing a persistent pattern in which wage and occupation growth failed to meaningfully narrow inequality.

Yes, but …

Some economists remain skeptical about recent employment gains, pointing to a participation rate — the share of people working or actively seeking work among the economically active population — that remains below pre-pandemic levels. As of the rolling quarter ending in October 2024, the participation rate stood at 62.6%, compared with 63.6% before Covid.

The decline is particularly pronounced among youth workers, a trend that may not be entirely negative. Analysts suggest it could reflect improved economic conditions that allow families to prioritize education over immediate income, enabling more young people to remain in school. Economists classify individuals aged 14 and older as part of the economically active population.

Another factor poised to shape the participation rate is the Pé-de-Meia¹ program, introduced in late 2023. The initiative provides savings incentives for low-income students, encouraging them to complete high school rather than entering the workforce prematurely. 

While its long-term impact remains to be seen, it could have a transformative effect on youth participation in the labor market.

The rate of young people not in employment, education or training (NEET) is also the lowest on record at 21.2%, dating back to 2012. IBGE analyst Denise Guichard said in December that the reduction is “thanks to the improvement of the labor market” and to demographic shifts that lowered the size of teenagers in Brazil.

Labor market participation also reveals a significant gender disparity: women have been slower than men to re-enter the workforce following the pandemic.

Several factors contribute to this lag. As The Brazilian Report has previously documented, caregiving responsibilities — whether for children, the elderly or people with disabilities — remain disproportionately borne by women in Brazilian households. Additionally, among wealthier families, particularly in more conservative circles, there has been a growing cultural emphasis on women dedicating themselves exclusively to domestic roles.

Yet, demographic trends and recent policy changes are countering these forces, encouraging more women to join the labor market, according to FGV Social’s Marcelo Neri. One such factor is Brazil’s declining household size, driven by a reduced number of children per family. 

Another is a policy introduced in June 2023 that allows Bolsa Família beneficiaries — most of whom are women — to continue receiving half their benefits for up to two years after securing low-income formal employment, provided their per capita family income remains below approximately USD 118 (half the Brazilian minimum wage).

“The data on Class C [lower-middle class]² and labor income show a real boom, far outpacing what GDP growth alone would suggest, even though GDP has surprised on the upside,” Neri said. He likens the current labor market dynamics to 2014, when Brazil experienced robust employment growth.

However, Neri cautions against complacency, recalling that the optimism of 2014 was followed by a deep political and economic crisis — the worst recession on record outside of the Covid pandemic and a deeply polarizing impeachment process that scarred the country’s political system. 

“If 2024 mirrors 2014, we can only hope 2025 does not mirror 2015,” he added.

Other stories we’re following

🎬 After actress Fernanda Torres made history as the first Brazilian actor to win a Golden Globe, the number of theaters screening Walter Salles’s dictatorship-era drama “I’m Still Here” doubled. To date, the film has drawn an audience of about 3.1 million — an underwhelming figure largely attributed to the country's limited support for domestic cinema.

🦟 The government has announced reparations of BRL 60,000 (USD 9,930) for families of children born with microcephaly linked to Brazil's 2015-2016 Zika virus epidemic. However, families have criticized the decision to veto lifelong monthly pensions for these children, whose severe birth defects will permanently limit their ability to work.

🙅 São Paulo’s Human Rights Secretariat reported providing assistance to 103,195 women who were victims of violence between January and November 2024 — nearly double the number recorded the previous year. City officials attribute the surge to an expansion of services, including the opening of new support centers and the deployment of larger teams.

🌡️ Last year was the hottest ever recorded in Brazil, with an average temperature of 25.02 degrees Celsius (77.04 Fahrenheit) throughout the year. This broke 2023’s previous high of 24.92°C, meaning that since the National Meteorology Institute’s (Inmet) records began in 1961, the country has never been hotter than in the past two years.

1  Literally meaning “sock,” a pé de meia is the Brazilian Portuguese phrase for a nest egg, or money set aside for the future.

2  Brazil's income brackets are divided into five groups, named from A (revenue of above BRL 25,000 per month) to D/E (below BRL 3,400).