2012 Articles

The Impact of Bolsa Família on Poverty: Does Brazil’s Conditional Cash Transfer Program Have a Rural Bias?

Higgins, Sean

A crucial dimension in assessing Brazil's signature anti-poverty program Bolsa Família is to know how the program has affected the living standards of different sub-groups of the poor. This paper addresses the specific question of whether it affects the rural poor and the urban poor differently. Perhaps it has had a larger impact on the urban poor because they live in closer proximity to schools, health facilities, and transfer payment locations, and might therefore experience lower participation costs and fewer barriers to complying with the program's conditions. Or, perhaps it has had larger benefits for the rural poor because, while they receive the same transfer payments and face the same eligibility cut-off as the urban poor in nominal terms, they face a lower cost of living. The purpose of this paper is to explore the effect of not adjusting Bolsa Família's eligibility cut-off or transfer size for spatial cost-of-living differences. In particular, it compares and contrasts Bolsa Família's impact at the state level in different states and formally tests the hypothesis that the cash transfer program has had a larger impact on poverty in Brazil's most rural states than in its most urban states. Indeed, the data points to a statistically significant rural bias. In addition to the state-level analysis (which is very robust to the choice of states, poverty lines, and spatial price indices), a probit regression analysis indicates that poor rural households are more likely than poor urban ones to escape poverty due to Bolsa Família.