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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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  • Catalina Amuedo-Dorantes
  • Laura Juarez

Abstract

This paper estimates the crowding out of private transfers caused by 70 y Más -a public assistance program for rural elderly adults in Mexico, for whom family support is an important source of income. Using data from the National Household Income and Expenditure Survey and a triple-difference estimation, we find that the program crowds out private transfers by 37 percent, and it does so mainly 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 elderly adults, domestic donors are dampening the effect of the program, although not completely neutralizing it.

Suggested Citation

  • Catalina Amuedo-Dorantes & Laura Juarez, 2013. "Old-Age Government Transfers and the Crowding Out of Private Gifts: The 70 and Above Program for the Rural Elderly in Mexico," Working Papers 2013-17, Banco de México.
  • Handle: RePEc:bdm:wpaper:2013-17
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    Cited by:

    1. Jing You & Miguel Niño-Zarazúa, 2017. "Smoothing or strengthening the 'Great Gatsby curve'?: The intergenerational impact of China's New Rural Pension Scheme," WIDER Working Paper Series wp-2017-199, World Institute for Development Economic Research (UNU-WIDER).
    2. Nikolov, Plamen & Bonci, Matthew, 2020. "Do public program benefits crowd out private transfers in developing countries? A critical review of recent evidence," World Development, Elsevier, vol. 134(C).
    3. 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.
    4. Yanying Chen & Yi Jin Tan, 2018. "The effect of non-contributory pensions on labour supply and private income transfers: evidence from Singapore," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-54, December.
    5. Alexander M. Danzer & Lennard Zyska, 2020. "Pensions and Fertility: Micro-Economic Evidence," Working Papers 192, Bavarian Graduate Program in Economics (BGPE).
    6. Gustavo Canavire‐Bacarreza & Alberto Chong & Fernando Ríos‐Avila & Mónica Yáñez‐Pagans, 2020. "Will elders provide for their grandchildren? Unconditional cash transfers and educational expenditures in Bolivia," Review of Development Economics, Wiley Blackwell, vol. 24(2), pages 424-447, May.
    7. 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.
    8. 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.
    9. Guirkinger, Catherine & Platteau, Jean-Philippe, 2019. "The dynamics of family systems: lessons from past and present times," CEPR Discussion Papers 13570, C.E.P.R. Discussion Papers.
    10. Emma Aguila & Mariana López-Ortega & Luis Miguel Gutiérrez Robledo, 2018. "Non-contributory pension programs and frailty of older adults: Evidence from Mexico," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-19, November.
    11. 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.
    12. 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.
    13. Pedro Orraca-Romano, 2015. "Does access to free health insurance crowd-out private transfers? Evidence from Mexico’s Seguro Popular," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 24(1), pages 1-34, December.
    14. 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).
    15. José Luis Iparraguirre, 2020. "Economics and Ageing," Springer Books, Springer, number 978-3-030-29019-1, March.
    16. Jing You & Miguel Niño-Zarazúa, 2017. "Smoothing or strengthening the ‘Great Gatsby Curve’? The intergenerational impact of China’s New Rural Pension Scheme," WIDER Working Paper Series 199, World Institute for Development Economic Research (UNU-WIDER).
    17. 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.

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    More about this item

    Keywords

    Old-age government transfers; crowding-out; remittances; Mexico;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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