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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)

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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Bibliographic 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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Date of creation: Dec 1993
Date of revision:
Handle: RePEc:boc:bocoec:236

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Cited by:
  1. Jeffrey Flory, 2011. "Micro-Savings and Informal Insurance in Villages: How Financial Deepening Affects Safety Nets of the Poor, A Natural Field Experiment," Working Papers 2011-008, Becker Friedman Institute for Research In Economics.
  2. Bert Hofman & Susana Cordeira Guerra, 2004. "Ensuring Inter-regional Equity and Poverty Reduction," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0411, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Juergen Jung & Chung Tran, 2009. "Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam," Working Papers 2009-01, Towson University, Department of Economics, revised Oct 2009.
  4. 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.
  5. Juergen Jung & Chung Tran, 2011. "The Extension of Social Security Coverage in Developing Countries," Working Papers 2011-06, Towson University, Department of Economics, revised Nov 2011.
  6. Devarajan, Shantayanan & Hammer, Jeffrey S., 1998. "Risk reduction and public spending," Policy Research Working Paper Series 1869, The World Bank.
  7. Rob Vos, 1996. "Educational Indicators: What's to Be Measured?," IDB Publications 10858, Inter-American Development Bank.

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