Working paper abstract

#2016-030

The effect of means-tested social transfers on labour supply: heads versus spouses - An empirical analysis of work disincentives in the Kyrgyz Republic

Franziska Gassmann & Lorena Zardo Trindade

This paper empirically estimates potential work disincentives of a means-tested social transfer in the Kyrgyz Republic for adults with different household positions. Using data from the Kyrgyz Integrated Household Survey 2012, the analysis compares labour market outcomes for household heads and spouses. Binary response models and quasi-experimental methods are applied to assess the effect of the Monthly Benefit for Poor Families with Children (MBPF) on labour supply. The analysis indicates that overall beneficiaries have on average higher labour market participation rates when compared to non-beneficiaries, but they are more exposed to seasonal effects. Results differ when analysing different household members separately. Household heads in beneficiary households are less likely to be economically active than similar non-beneficiaries. Yet, spouses are more likely to be economically active. However, the effects differ depending on whether the household is located in the South or the North of the country.

Key words: social transfers, work disincentives, Kyrgyz Republic

JEL Classification: I38, J22