**Table 2: Summary of Different Channels through which Cash Transfers Affect Labor Outcomes**

|_Channel_|_Direction of Impact and Evidence_|
|---|---|
|Income Effect/Labor-Leisure Trade-off|**Reduces**amount of work at both extensive and intensive margins, with**no**<br>**change**in income per hour worked. Most apparent when transfers are large<br>or prolonged, and when recipients face no other constraints: e.g. lottery<br>winners, pensions.|
|Health Productivity Effect|**Increases**amount of work, and income earned per hour worked. This<br>channel is unlikely to apply in most settings, but may have an impact for<br>transfers to the very poorest.|
|Self-employment Liquidity Effect|**Increases**amount of self-employment work at both extensive and intensive<br>margins, and income earned from self-employment. Typically a smaller,<br>but positive, impact on all work. Clearest for programs that target<br>entrepreneurs, particularly men, but also apparent in remittance transfers<br>and UCTs.|
|Human Capital Accumulation Effect|Increases schooling attainment for youth in recipient households that can<br>result in long-term**increases**in income from higher human capital when<br>they become adults. Impact on amount worked is minimal. Evidence from<br>existing CCTs mixed between zero and positive impacts.|
|Insurance Effect|Changes the type of work people do, towards riskier activities that**increase**<br>expected income, like self-employment, migration, or different crops, with<br>**less impact**on amount worked. Applies most when transfers are reliable<br>and repeated: e.g. some CCTs|
|Investment in Labor Search Effect|**Reduces**likelihood of working in very short term as workers search for<br>better matches.**Increases**job quality, and income per hour worked in<br>medium-term, with little impact on amount work. Applies most for<br>transfers conditioned on job search, like transport subsidies.|
||**Increases**amount of work if grants given conditional on operating a<br>business or other work activity Some evidence from grants to|
|Conditionality Effect from Conditioning<br>on Work or Not Working|.<br>microenterprises suggest this channel operates.**Decreases**work or income<br>if grant eligibility depends on means-testing, or on not working. More of an<br>issue for upper middle income and rich countries, with little evidence of<br>this channel for most low- and middle-income country cash transfers.|
|Conditionality Effect from Conditioning<br>on Time-Consuming Activities|**Reduces**work if individuals must spend time on activities in order to<br>receive grant, but little evidence of this channel operating. Can**increase**<br>amount worked, particularly by women, if condition is for children to be in<br>school. Most apparent for CCTs.|
|Human Capital/Scarring Effect|**Counteracts**labor/leisure tendency to reduce work if transfers are known<br>to be temporary. Appears plausible, but no evidence for this channel in<br>existing literature.|
|General Equilibrium Effects|Transfers can**increase**work and work income for non-beneficiaries if self-<br>employment opportunities increase and transfer recipients move away from<br>wage labor; may**reinforce**labor/leisure trade-off if value of leisure rises<br>when others also increase leisure. Limited evidence, although ultra-poor<br>program in Bangladesh and emigration studies find increased wages for<br>others in village.|

Source: Authors' interpretation of the literature.

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