The long-term impact of (un)conditional cash transfers on labour market outcomes in Ecuador

Despite the popularity of conditional cash transfers in low- and middle- income countries, evidence on their long-term effects remains scarce. This paper assesses the impact of the Ecuador’s Human Development Grant on the formal sector labour market outcomes of children in eligible households. This grant—one of the first of its kind—is characterised by weak enforcement of its eligibility criteria. By means of a regression discontinuity design, we find that this programme increased formal employment rates and labour in- come around a decade after exposure, thereby curbing the intergenerational transmission of poverty. We discuss possible mediating mechanisms based on findings from previous literature and, in particular, provide evidence on how the programme contributed to persistence in school in the medium run.