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The Effects of Non-Contributory Pensions on Material and Subjective Well Being

Author

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  • Bando, Rosangela
  • Galiani, Sebastián
  • Gertler, Paul

Abstract

Public expenditures on non-contributory pensions are equivalent to at least onepercent of GDP in several countries in Latin America and is expected to increase. We explore the effect of non-contributory pensions on the well-being of the beneficiary population by studying the Pension 65 program in Peru, which uses a poverty eligibility threshold. We find that the program reduced the average score of beneficiaries on the Geriatric Depression Scale by nine percent and reduced the proportion of older adults doing paid work by four percentage points. Moreover, households with a beneficiary increased their level of consumption by 40 percent. All these effects are consistent with the findings of Galiani, Gertler and Bando (2016) in their study on a non-contributory pension scheme in Mexico. Thus, we conclude that the effects of non-contributory pensions on well-being in rural Mexico can be largely generalized to Peru.

Suggested Citation

  • Bando, Rosangela & Galiani, Sebastián & Gertler, Paul, 2017. "The Effects of Non-Contributory Pensions on Material and Subjective Well Being," IDB Publications (Working Papers) 8563, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:8563
    DOI: http://dx.doi.org/10.18235/0000850
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    2. -, 2020. "Universal Social Protection in Latin America and the Caribbean. Selected texts 2006-2019," Páginas Selectas de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 45093 edited by Eclac, September.
    3. José Luis Iparraguirre, 2020. "Economics and Ageing," Springer Books, Springer, number 978-3-030-29019-1, December.
    4. Pak, Tae-Young, 2021. "What are the effects of expanding social pension on health? Evidence from the Basic Pension in South Korea," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    5. Andersen, Asbjørn G. & Kotsadam, Andreas & Somville, Vincent, 2022. "Material resources and well-being — Evidence from an Ethiopian housing lottery," Journal of Health Economics, Elsevier, vol. 83(C).
    6. Alzua, Maria Laura & Cantet, Maria Natalia & Dammert, Ana & Olajide, Daminola, 2020. "Mental Health Effects of an Old Age Pension: Experimental Evidence for Ekiti State in Nigeria," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304176, Agricultural and Applied Economics Association.
    7. DECANCQ Koen & OLIVERA Javier & SCHOKKAERT Erik, 2018. "Program evaluation and ethnic differences: the Pension 65 program in Peru," LISER Working Paper Series 2018-21, Luxembourg Institute of Socio-Economic Research (LISER).
    8. Pak, Tae-Young, 2020. "Social protection for happiness? The impact of social pension reform on subjective well-being of the Korean elderly," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 349-366.
    9. Adhikari, Tamanna & Greyling, Talita & Rossouw, Stephanie, 2021. "The ugly truth about social welfare payments and households' subjective well-being," GLO Discussion Paper Series 883, Global Labor Organization (GLO).
    10. Christoph Freudenberg & Mr. Frederik G Toscani, 2019. "Informality and the Challenge of Pension Adequacy: Outlook and Reform Options for Peru," IMF Working Papers 2019/149, International Monetary Fund.
    11. Gu, Xin & Li, Hao & Peng, Langchuan, 2022. "The anti-domestic violence law and women's welfare: Evidence from a natural experiment in China," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 1-16.
    12. Laura Juárez & Yunuen Nicte Rodríguez Piña, 2020. "El efecto de las pensiones no contributivas sobre el bienestar subjetivo de los adultos mayores en México," Serie documentos de trabajo del Centro de Estudios Económicos 2020-03, El Colegio de México, Centro de Estudios Económicos.
    13. Maria Laura Alzua & Natalia Cantet & Ana Dammert & Damilola Olajide, 2019. "Welfare Effects of a Non-Contributory Old Age Pension: Experimental Evidence for Ekiti State, Nigeria," Working Papers PIERI 2019-15, PEP-PIERI.

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    More about this item

    Keywords

    Non-contributory pensions; Poverty; Mental health; Well being;
    All these keywords.

    JEL classification:

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

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