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Old-Age Government Transfers and the Crowding Out of Private Gifts: The 70 and Above Program for the Rural Elderly in Mexico

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  • Amuedo-Dorantes, Catalina

    ()
    (San Diego State University)

  • Juarez, Laura

    ()
    (Bank of Mexico)

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    Abstract

    We estimate the crowding out of private transfers caused by 70 y Más – a public assistance program for the rural elderly in Mexico for whom family support is an important source of income. Using data from the Mexican Income and Expenditure Survey and a triple difference approach, we find that the program crowds out private gifts by 37 percent, and it does so mostly by reducing the probability of receiving domestic remittances. As a result, the non-labor income of beneficiaries increases by less than their government transfers. Thus, by reducing their private support to the elderly, domestic donors are dampening the effect of the program, although not completely neutralizing it.

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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7786.

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    Length: 40 pages
    Date of creation: Nov 2013
    Date of revision:
    Handle: RePEc:iza:izadps:dp7786

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    Related research

    Keywords: old-age government transfers; crowding-out; remittances; Mexico;

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    1. Brunner, Eric J, 1998. " Free Riders or Easy Riders?: An Examination of the Voluntary Provision of Public Radio," Public Choice, Springer, vol. 97(4), pages 587-604, December.
    2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
    3. Flore Gubert, 2002. "Do Migrants Insure Those who Stay Behind? Evidence from the Kayes Area (Western Mali)," Oxford Development Studies, Taylor & Francis Journals, vol. 30(3), pages 267-287.
    4. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
    5. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1985. "The Strategic Bequest Motive," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1045-76, December.
    6. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
    7. Juarez, Laura, 2009. "Crowding out of private support to the elderly: Evidence from a demogrant in Mexico," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 454-463, April.
    8. Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Remittances as insurance: evidence from Mexican immigrants," Journal of Population Economics, Springer, vol. 19(2), pages 227-254, June.
    9. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
    10. Santiago Levy & Norbert Schady, 2013. "Latin America's Social Policy Challenge: Education, Social Insurance, Redistribution," Journal of Economic Perspectives, American Economic Association, vol. 27(2), pages 193-218, Spring.
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