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Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam

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Author Info
Juergen Jung () (Department of Economics, Towson University)
Chung Tran () (Department of Economics, University of New South Wales)

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Abstract

In this paper we argue that the strategic interaction between the labor supply decision of the elderly and private transfers from their children lowers the opportunity cost of leisure of the elderly. This in turn magnifies the crowding-out effect of public pensions on the labor supply of the elderly. We show that this mechanism has implications for evaluating the crowding-out effect of public pensions in developing countries. That is, a misspecified econometric model that does not control for the endogeneity of private transfers leads to a biased estimate of the crowding-out effect of public pensions. Using data from a household survey in Vietnam we find that the effect of public pensions on the probability of retirement is 2.5 times larger when explicitly accounting for the interaction between private transfers and the labor supply decision of elderly individuals.

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File URL: http://www.towson.edu/econ/workingpapers/2009-01.pdf
File Format: application/pdf
File Function: First version, 2009
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Publisher Info
Paper provided by Towson University, Department of Economics in its series Working Papers with number 2009-01.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 44 pages
Date of creation: Sep 2009
Date of revision: Oct 2009
Handle: RePEc:tow:wpaper:2009-01

Contact details of provider:
Postal: Towson, Maryland 21252-0001
Phone: 410-704-2959
Fax: 410-704-3424
Web page: http://www.towson.edu/econ/
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For technical questions regarding this item, or to correct its listing, contact: (Juergen Jung).

Related research
Keywords: Altruism; crowding-out; social security; retirement; transfers.;

Find related papers by JEL classification:
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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This page was last updated on 2009-11-26.

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