Abstract
This paper analyzes the relationship between government transfer payments and labor force participation rates for a sample of 34 countries over the period of 1995- 2012. We benefit from two step system Generalized Method of Moments as a methodology and thereby eliminate the biases that may arise from endogenous variables. Our econometric results also confirm the employment of the dynamic methodology. First, we estimate the coefficients for overall population and then we re-estimate the coefficients for different genders. As a result of our estimations we observe that the significances and the values of coefficients increase when we employ labor force participation rates of females as dependent variable. Therefore, our findings suggest that transfer payments are more effective in working decisions of females.