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Private Transfers And The Effectiveness Of Public Income Redistribution In The Philippines

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Author Info
Donald Cox () (Department of Economics, Boston College)
Emmanuel Jiminez (The World Bank)

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Abstract

Private, inter-household income transfers in the Philippines are large and widespread. They are responsive to the economic status of households. Transfers are targeted to households headed by the non-employed and those without access to retirement pensions. Among the very poorest households, decreases in their pre-transfer income appear to prompt large increases in private transfers suggesting that transfers are in part motivated by altruism. The responsiveness of transfers to household income implies that attempts to improve the economic status of poor households could be thwarted by private responses. If a poor household can tap increased government aid, its private benefactors would cut back on their on transfers, For example, we estimate that if unemployment insurance were instituted in the Philippines, the policy would prompt such large reductions in private transfers that the jobless households would only be slightly better off. We also find that social security prompts similar, though smaller, reductions in private transfers, and those government efforts to alleviate poverty would fall short of the mark because of private-transfer responses. In spite of the private-transfer response, however, public transfers still confer benefits are smaller than those implied my analyses that ignore private-transfer behavior.

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Publisher Info
Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 236.

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Length: 23 pages
Date of creation: Dec 1993
Date of revision:
Handle: RePEc:boc:bocoec:236

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Related research
Keywords: Private transfers; publc transfers; remittances; income redistribution; altruism; risk sharing; social safety nets; Philippines.;

Find related papers by JEL classification:
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
D64 - Microeconomics - - Welfare Economics - - - Altruism
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

Cited by:
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  1. Sumon K. Bhaumik, 2001. "Intergenerational transfers: the ignored role of time," MPIDR Working Papers WP-2001-008, Max Planck Institute for Demographic Research, Rostock, Germany. [Downloadable!]
  2. Bert Hofman & Susana Cordeira Guerra, 2004. "Ensuring Inter-regional Equity and Poverty Reduction," International Studies Program Working Paper Series, at AYSPS, GSU paper0411, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
  3. Devarajan, Shantayanan & Hammer, Jeffrey S., 1998. "Risk reduction and public spending," Policy Research Working Paper Series 1869, The World Bank. [Downloadable!]
  4. Chung Tran, 2008. "Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam," Caepr Working Papers 2008-018, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
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