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How widespread are nonlinear crowding out effects? The response of private transfers to income in four developing countries

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Author Info

  • John Gibson
  • Susan Olivia
  • Scott Rozelle

Abstract

This article investigates the relationship between household income and private transfers received in developing countries. If private transfers are unresponsive to household income, there is less likelihood of expansions in public social security crowding out private transfers. Most literature finds that private transfers are unresponsive, but this may be because responses have been obscured by the methods that ignore nonlinearities. Threshold regression techniques find such nonlinearity in the Philippines and scope for serious crowding out, with 30-80% of private transfers potentially displaced for low-income households (Cox et�al., 2004). To see if these nonlinear effects occur more widely, semiparametric and threshold regression methods are used to model private transfers in four developing countries - China, Indonesia, Papua New Guinea and Vietnam. The results reported in this article suggest that nonlinear crowding out effects are not important features of transfer behaviour in these countries. The transfer derivatives under a variety of assumptions only range between 0 and -0.08.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00036841003800831
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 43 (2011)
Issue (Month): 27 ()
Pages: 4053-4068

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Handle: RePEc:taf:applec:v:43:y:2011:i:27:p:4053-4068

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Cited by:
  1. Margaret Grosh & Carlo del Ninno & Emil Tesliuc & Azedine Ouerghi, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications, The World Bank, number 6582, October.
  2. Stefan Dercon, 2011. "Social Protection, Efficiency and Growth," Economics Series Working Papers WPS/2011-17, University of Oxford, Department of Economics.
  3. Daniel M. Hungerman, 2014. "Public Goods, Hidden Income, and Tax Evasion: Some Nonstandard Results from the Warm-Glow Model," NBER Working Papers 19804, National Bureau of Economic Research, Inc.

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