A recent column examines evidence that the expansion of Bolsa Família negatively impacted labor supply in Brazil, though this effect appears to be waning since mid-2025. The number of beneficiaries dropped from 22 million at the end of 2022 to 18.7 million in December 2025, driven by labor market improvements and stricter oversight. Despite the drawbacks, studies show the program's benefits outweigh its adverse effects.
The debate over Bolsa Família intensified after a Santa Catarina businessman reported hiring difficulties, blaming the program and threatening to close his business. This sparked polarization on social media, but a balanced analysis reveals important details.
Empirical evidence indicates that the program's strong expansion in coverage and average benefit value negatively affected labor supply and increased informality. However, this impact seems to be diminishing since mid-2025, as the number of beneficiaries has declined due to labor market improvements and stricter government oversight.
From 2014 to the end of 2021, the program served between 14 million and 14.5 million families. With the shift to Auxílio Brasil at the end of 2021, coverage rose to over 18 million by mid-2022. Ahead of the 2022 elections, it reached about 22 million by year's end. From January 2023 to June 2025, it fell to 20.5 million, and in the second half of 2025, it dropped to 18.7 million in December, a reduction of more than 3 million from the peak.
Empirical studies, based on data predating the 2025 decline, show negative effects on labor supply, but some beneficiaries, particularly youth, spent more time studying, potentially benefiting the future market, as per Daniel Duque's research published in August of the previous year.
Assessments indicate the program's benefits outweigh its costs, though continuous improvements are ideal to maximize positives and minimize negatives, given fiscal constraints. Beyond Bolsa Família, factors like current near-full employment – unlike the excess unemployment from 2016 to 2024 – and gig economy growth, from 770,000 workers in 2015 to 2.1 million in 2025 per the Central Bank, more significantly impact hiring.
