Targeted Cash Transfer Programmes in Brazil: BPC and the Bolsa Familia

Abstract

We describe several characteristics of the two most important targeted cash transfer programs in Brazil, the Continuous Cash Benefit (BPC) and the Bolsa Familia. We discuss their institutional aspects, long term sustainability, beneficiaries and levels of targeting. We also address the need for conditionalities, the effects of the transfers on labor market participation, as well as the relevance of the so called “exit doors”. Our conclusion is that, on the one hand, the programs are accomplishing the goals they were designed to achieve. They reduce poverty and inequality, under costs which are compatible with the Brazilian budgetary capacity. On the other hand, the programmes have no negative effects on incentives to work and contributions to the pensions system. Consequently, we argue that these programmes should be kept in place and, if possible, expanded in the near future.