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The effect of social entitlement programs on private transfers: new evidence of crowding out

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  • Kristopher S. Gerardi
  • Yuping Tsai

Abstract

This paper exploits a natural policy experiment to directly identify the crowding out effects of public transfers on the incidence and level of private transfers. The introduction of a large social security program in Taiwan is used to estimate the effect of an exogenous increase in government transfer payments to the elderly on the private transfer behavior of their adult children. Using an instrumental variables strategy that accounts for the endogeneity of receiving public transfers, the empirical results show strong evidence of crowding out on the extensive margin (the probability of providing a positive transfer) and weaker evidence of crowding out on the intensive margin (the amount of the transfer conditional on it being positive).

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Paper provided by Federal Reserve Bank of Atlanta in its series FRB Atlanta Working Paper with number 2010-15.

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Date of creation: 2010
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Handle: RePEc:fip:fedawp:2010-15
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Cited by:

  1. Iwata, Shinichiro & Yukutake, Norifumi, 2013. "Housing subsidy or parental support: Crowding-out effect of mortgage tax deduction," MPRA Paper 46647, University Library of Munich, Germany.
  2. Neugart, Michael & Kemmerling, Achim, 2015. "The emergence of redistributive pensions in the developing world," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112884, Verein für Socialpolitik / German Economic Association.

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