A key challenge in designing social transfer programs is determining who should receive benefits. In developing countries, large informal sectors make income and employment hard to observe, and governments often rely on alternative targeting approaches. As countries' administrative capacity expands, income-based means-testing with third-party reporting is likely to spread—yet where much income remains unverifiable, enforcing a threshold looks very different from under full information. We study this in the context of Brazil's Bolsa Família, a means-tested program in which eligibility is based on self-reported income, supplemented by annual audits that cross-check declarations against administrative records. Exploiting quasi-random variation in whether a beneficiary's formal employment is visible to the government, we estimate the effect of enforcement on formal labor supply, income reporting, and household composition reporting. Beneficiaries whose employment becomes visible are substantially more likely to update their records and to have their benefits cancelled, confirming that audits detect ineligible recipients. We then ask whether beneficiaries adjust along less observable reporting margins or exit formal employment altogether, and leverage subsequent audit cycles—which progressively incorporated new data sources—to trace how these responses evolve as verification capacity expands.

La presentación de la siguiente conferencia se realiza en idioma español.