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Private Transfers And The Effectiveness Of Public Income Redistribution In The Philippines

Author

Listed:
  • 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.

Suggested Citation

  • Donald Cox & Emmanuel Jiminez, 1993. "Private Transfers And The Effectiveness Of Public Income Redistribution In The Philippines," Boston College Working Papers in Economics 236, Boston College Department of Economics.
  • Handle: RePEc:boc:bocoec:236
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    Cited by:

    1. Jung, Juergen & Tran, Chung, 2012. "The extension of social security coverage in developing countries," Journal of Development Economics, Elsevier, vol. 99(2), pages 439-458.
    2. Rob Vos, 1996. "Educational Indicators: What's to Be Measured?," IDB Publications (Working Papers) 10858, Inter-American Development Bank.
    3. Devarajan, Shantayanan & Hammer, Jeffrey S., 1998. "Risk reduction and public spending," Policy Research Working Paper Series 1869, The World Bank.
    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. Chung Tran, 2008. "Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam," Caepr Working Papers 2008-018, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
    6. 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.
    7. Jeffrey A. Flory, 2011. "Micro-Savings & 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.

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