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The Effects of a Noncontributory Pension Program on Labor Force Participation: The Case of 70 y Más in Mexico

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  • Laura Juarez
  • Tobias Pfutze

Abstract

We estimate the effect of 70 y Más, an age-conditioned cash transfer program for individuals age 70 and older in rural Mexico, on the labor force participation of beneficiaries and of younger individuals who live with them. Using data from the 2010 Mexican census, we exploit the age and locality population thresholds to identify the effects of the program, which at the time operated only in localities with less than 30,000 inhabitants. We find that the program reduces the labor force participation of elderly men, particularly those who live alone and who are relatively poor, but has a much weaker effect on that of elderly women. The program has no statistically significant effect on the labor force participation of either prime-age men or women who live with potential beneficiaries, and it has a negative and significant effect on the labor force participation of boys age 12-17, particularly those in the lowest wealth quintiles, but not on that of same-age girls. These results suggest that the program affects mostly the labor supply of the intended beneficiaries and that of marginal workers, like adolescent boys.

Suggested Citation

  • Laura Juarez & Tobias Pfutze, 2015. "The Effects of a Noncontributory Pension Program on Labor Force Participation: The Case of 70 y Más in Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 63(4), pages 685-713.
  • Handle: RePEc:ucp:ecdecc:doi:10.1086/681668
    DOI: 10.1086/681668
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    Cited by:

    1. 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.
    2. Laura Juarez & Tobias Pfutze, 2020. "Can non-contributory pensions decrease food vulnerability? The case of Mexico," Empirical Economics, Springer, vol. 59(4), pages 1865-1882, October.
    3. Yahirun, Jenjira J. & Sheehan, Connor M. & Hayward, Mark D., 2017. "Adult children's education and changes to parents' physical health in Mexico," Social Science & Medicine, Elsevier, vol. 181(C), pages 93-101.
    4. Catalina Amuedo-Dorantes & Cristina Borra, 2018. "Internal Mobility after the Expansion of the Welfare State: Evidence from Spain," CReAM Discussion Paper Series 1806, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    5. Orraca Romano, Pedro Paulo, 2016. "Essays on development and labour economics for Mexico," Economics PhD Theses 0816, Department of Economics, University of Sussex Business School.
    6. Miguel Ángel Borrella Mas & Mariano Bosch Mossi & Marcello Sartarelli, 2016. "Non-Contributory Pensions Number-Gender Effects on Poverty and Household Decisions," Working Papers. Serie AD 2016-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    7. Catalina Amuedo‐Dorantes & Laura Juarez & Jorge Alonso, 2019. "The Effect Of Noncontributory Pensions On Saving In Mexico," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 931-952, April.
    8. Tobias Pfutze & Carlos Rodríguez-Castelán, 2019. "Can a Small Social Pension Promote Labor Force Participation? Evidence from the Colombia Mayor Program," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2019), pages 111-154, October.
    9. Mena, Gary & Hernani-Limarino, Werner L., 2015. "Intended and Unintended Effects of Unconditional Cash Transfers: The Case of Bolivia's Renta Dignidad," IDB Publications (Working Papers) 7350, Inter-American Development Bank.
    10. Jorge Alonso & Catalina Amuedo-Dorantes & Laura Juárez, 2016. "The Effect of Non-contributory Pensions on Saving in Mexico," IDB Publications (Working Papers) 95976, Inter-American Development Bank.
    11. Jonathan Puigvert & Miriam Juárez-Torres, 2019. "Labour Force Participation and the Business Cycle in Mexico," Working Papers 2019-04, Banco de México.

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    More about this item

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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