The effect of welfare payments on work: Regression discontinuity evidence from Ecuador

We study the impact of welfare payments in Ecuador on the probability that adults work, and on whether they are employed in the formal or informal sectors. Our identification strategy exploits the fact that welfare was limited to individuals below a cutoff value on a household "poverty score". We find no evidence that transfers discouraged work. However, among women, welfare payments led to reductions in social security contributions (which are mandated for salaried workers), although the magnitude of these effects is small.