Abstract: Cash transfers have expanded widely in developing countries, and have been credited for sizable reductions in poverty. Yet, the potential unintended consequences of these programs for labor markets have spurred a heated policy debate. This paper studies a context where potential disincentives to work are particularly strong: the impact of a large scale means-tested cash transfer program - Bolsa Familia in Brazil - on formal labor markets, where wages are more-easily verifiable. Using variation from an expansion of the program across municipalities, we find that it increased formal employment. The evidence is consistent with large multiplier effects of Bolsa Familia benefits that dominate negative effects in formal labor supply at the individual level, which we also document using variation from income eligibility thresholds. The results suggest that even in a context where disincentive effects are particularly strong, the total effect of the policy on local labor markets can be positive. They also highlight the importance of accounting for both individual and aggregate effects of cash transfer programs in the policy debate.