Our study investigates the economic, social, and psychological effects of an unconditional, permanent, guaranteed income program in Maricá—a city in the metropolitan area of Rio de Janeiro, Brazil—called Renda Básica de Cidadania (Citizens’ Basic Income). This is a large-scale policy created in 2015 and expanded by local leadership in 2019 that combines several previous municipal cash transfer programs. The benefits are paid to each person in eligible households rather than to the entire household. Eligibility requires at least three years of residency in the city and registration with the Cadastro Único, the federal government’s unified social benefit registry. The Cadastro Único is restricted to households with a monthly income less than or equal to three times the monthly minimum wage. At the time of our study, the program benefited around 42,000 people, roughly one-fourth of Maricá residents. Beneficiaries received a monthly payment equivalent to approximately $57 per person (adjusted for purchasing power) at the start of the transfers, paid in mumbucas, a local digital currency. In April 2020, in response to the COVID-19 crisis, the transfer was temporarily increased to approximately $127 per person. Between December 2021 and March 2022, the benefit was reduced to $67. In April 2022, it was increased to $79. Finally, it was increased to its current value of $84 in December 2023.
Our study estimates the effects of the program by comparing recipients with other members of the federal benefit registry who were not recipients but shared similar demographics. We gathered data by combining the federal benefit registry database for Maricá with a dataset of recipients obtained from the city government. Our dataset includes 29,995 households. From this dataset, we surveyed 5,182 individuals between September 2021 and April 2022, split roughly evenly between recipients and nonrecipients.
Our study reports several findings. First, there were some positive effects on the well-being of transfer recipients. Recipient households’ monthly income (including transfers) increased by $104 per month, a 9 percent increase relative to nonrecipients. Per capita consumption did not increase significantly, but household consumption rose by $43, or 5 percent relative to nonrecipient households. This could be explained by the size of recipient households growing. Indeed, the number of nonworking household members among recipients increased by 12 percent relative to nonrecipients. People may have moved into recipient households to maximize the magnitude of transfer payments because these payments increased as the number of nonworking household members increased. Furthermore, an index of the health and education of the oldest child in the household improved by 0.18 standard deviations, although other analyses cannot confirm this finding. There were no significant effects on depression, intimate partner violence, and nonhousing assets.
Second, the transfers displaced some other sources of household income. The average transfer per household at the time of the survey was $180. Thus, the fact that households’ total income increased by only $104 after the transfer reveals that household income decreased by about $76 absent the transfer. Labor income, which comprises about 48 percent of households’ total income, fell by $96 (or 17 percent), which more than accounts for the reduction in income without the transfer.
The reduction in labor income could have been partly driven by reductions in labor supply. Hours worked decreased by 7 percent for survey respondents and 13 percent for other household members. Additionally, there was a 5 percent reduction in the number of household members who worked. However, our analysis cannot rule out that these outcomes occurred by chance. Recipient households’ decrease in labor income and lack of large labor supply reductions suggest that recipients may have changed to more desirable but lower-paying jobs.
Third, the positive effects of the transfers were strongest among disadvantaged households. Specifically, the transfers increased income more in households headed by women than those headed by men. Similarly, household income and consumption increased more in households with children than those without. These findings suggest that the transfers were successful in protecting particularly vulnerable households.
Fourth, recipient households’ access to financial services increased relative to nonrecipients due to increased access to the Mumbuca Bank, which manages the mumbuca currency in which the transfers are delivered. There was also a decline in an index of economic security; this unexpected finding was driven by a reduction in savings among recipient households. A potential explanation is that recipients may not have thought of the transfer as income that could be saved because it is delivered in a local currency that cannot be invested in assets or placed in interest-bearing savings accounts. Lastly, the program improved recipients’ assessment of the mayor who spearheaded the transfer program.
