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Non-contributory pensions

Author

Listed:
  • Rosangela Bando
  • Paul Gertler
  • Sebastián Galiani

Abstract

The creation of non-contributory pension schemes is becoming increasingly common as countries struggle to reduce poverty. Drawing on data from Mexico's Adultos Mayores Program (Older Adults Program) --a cash transfer scheme aimed at rural adults over 70 years of age-- we evaluate the effects of this program on the well-being of the beneficiary population. Exploiting a quasi-experimental design whereby the program relies on exogenous geographical and age cutoffs to identify its target group, we find that the mental health of elderly adults in the program is significantly improved, as their score on the Geriatric Depression Scale decreases by 12%. We also find that the proportion of treated individuals doing paid work is reduced by 20%, with most of these people switching from their former activities to work in family businesses; treated households show higher levels of consumption expenditures (on average, an increase of 23%). Very importantly, we also rule out significant anticipation effects that might have been associated with the program transfers. Thus, overall, we find that non-contributory pension schemes target to the poor in developing countries can improve the well-being of poor older adults without having any indirect impact (through potential anticipation effects) on the earnings or savings of future program participants.

Suggested Citation

  • Rosangela Bando & Paul Gertler & Sebastián Galiani, 2014. "Non-contributory pensions," IDB Publications (Working Papers) 6497, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:6497
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Rosangela Bando & Sebastian Galiani & Paul Gertler, 2016. "The Effects of Non-Contributory Pensions on Material and Subjective Well Being," NBER Working Papers 22995, National Bureau of Economic Research, Inc.
    2. repec:spr:izalpo:v:7:y:2018:i:1:d:10.1186_s40173-018-0099-3 is not listed on IDEAS
    3. Loumrhari, Ghizlan, 2016. "Pensions sociales et réduction de la pauvreté. Le cas du Maroc
      [Social pensions and reduction of the poverty. The case of Morocco]
      ," MPRA Paper 74076, University Library of Munich, Germany.
    4. repec:eee:jcecon:v:46:y:2018:i:1:p:53-77 is not listed on IDEAS
    5. Pfutze,Tobias & Rodriguez Castelan,Carlos, 2015. "Can a small social pension promote labor force participation ? evidence from the Colombia Mayor program," Policy Research Working Paper Series 7516, The World Bank.
    6. Cheng, Lingguo & Liu, Hong & Zhang, Ye & Zhao, Zhong, 2018. "The health implications of social pensions: Evidence from China's new rural pension scheme," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 53-77.
    7. Italo López García & Andrés Otero, 2017. "The Effects of Means-tested, Noncontributory Pensions on Poverty and Well-being: Evidence from the Chilean Pension Reforms," Working Papers wp358, University of Michigan, Michigan Retirement Research Center.
    8. Tabea Herrmann & Attakrit Leckcivilize & Juliane Zenker, 2017. "The Impact of Cash Transfers on Child Outcomes in Rural Thailand: Evidence from a Social Pension Reform," PIER Discussion Papers 77, Puey Ungphakorn Institute for Economic Research, revised Dec 2017.
    9. Inés Berniell & Dolores de la Mata & Matilde P. Machado, 2013. "The impact of a permanent Income shock on the situation of women in the household: the case of a pension reform in Argentina," DOCUMENTOS DE TRABAJO 011037, UNIVERSIDAD DEL ROSARIO.
    10. 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).
    11. Rosangela Bando & Claudia Uribe, 2016. "Experimental Evidence on Credit Constraints," IDB Publications (Working Papers) 7491, Inter-American Development Bank.

    More about this item

    Keywords

    Poverty; Pension funds; Social Security; Income; Consumption & Saving; Mental health; mental health; well-being; non-contributory pensions; poverty;

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I1 - Health, Education, and Welfare - - Health
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H4 - Public Economics - - Publicly Provided Goods

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