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The Effect of Non-contributory Pensions on Saving in Mexico

Author

Listed:
  • Jorge Alonso
  • Catalina Amuedo-Dorantes
  • Laura Juárez

Abstract

This paper examines the effects of non-contributory pension programs at the federal and state levels on Mexican households' saving patterns using micro data from the Mexican Income and Expenditure Survey. The federal program by itself appears to reduce the saving rate of households whose oldest member is either 18 to 54 or 65 to 69. State programs by themselves have no significant effects on household saving rates in the smallest localities, but in larger localities they may reduce the saving of households with members in their sixties. The combination of both types of programs generally does not have statistically significant effects on households' aggregate saving, probably because each program seems to affect different population strata. No significant effects are found for households whose oldest member is age-eligible (70 and older). Within specific investment categories, evidence is found of increases in human capital and in durable and financial goods for some age groups. Finally, the paper provides evidence on household-level labor supply responses.

Suggested Citation

  • Jorge Alonso & Catalina Amuedo-Dorantes & Laura Juárez, 2016. "The Effect of Non-contributory Pensions on Saving in Mexico," IDB Publications (Working Papers) 7861, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:7861
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    References listed on IDEAS

    as
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    3. Catalina Amuedo-Dorantes & Laura Juarez, 2015. "Old-Age Government Transfers and the Crowding Out of Private Gifts: The 70 and Above Program for the Rural Elderly in Mexico," Southern Economic Journal, Southern Economic Association, vol. 81(3), pages 782-802, January.
    4. Javier Olivera & Blanca Zuluaga, 2014. "The Ex‐Ante Effects Of Non‐Contributory Pensions In Colombia And Peru," Journal of International Development, John Wiley & Sons, Ltd., vol. 26(7), pages 949-973, October.
    5. Juarez Laura, 2010. "The Effect of an Old-Age Demogrant on the Labor Supply and Time Use of the Elderly and Non-Elderly in Mexico," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-27, June.
    6. Josep Pijoan-Mas, 2006. "Precautionary Savings or Working Longer Hours?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(2), pages 326-352, April.
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    22. repec:idb:idbbks:462 is not listed on IDEAS
    23. Orazio P. Attanasio & Miguel Székely, 1998. "Household Savings and Income Distribution in Mexico," Research Department Publications 4152, Inter-American Development Bank, Research Department.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Pensions Systems; Household Saving Rate; Labor supply; Housing; Human Capital Investment; Financial Assets; Household Income; Pension funds; Social Insurance; household saving rate; pensions systems;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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