Non-contributory pensions

Abstract

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.

Experimental Evidence on Credit Constraints

“…7 The high cost to access credit likely led instructors to rely on informal credit markets, but those markets are unlikely to provide perfect access to credit. This is shown by our results and evidence from other studies (Berg, 2013;Browning and Collado, 2001;Galiani, Gertler, and Bando, 2016;Hsieh, 2003;Lindskog, 2013;Rothstein, 2011).…”

“…The permanent income hypothesis states that if credit constraints do not bind, then consumption should not respond to changes in expected income. Empirically, expected changes in income are associated with changes in consumption in developing countries (Angeletos et al, 2001;Banerjee and Duflo, 2004;Berg, 2013;Browning and Collado, 2001;Edmonds, 2006;Galiani, Gertler, and Bando, 2016;Hsieh, 2003;and Lindskog, 2013). A test for credit constraints based on the sensitivity of consumption to expected income faces two main challenges.…”

Los efectos de los programas sociales en la salud de la población en condición de pobreza: evidencias a partir de las evaluaciones de impacto del presupuesto por resultados a programas sociales en Perú

“…Las evaluaciones a programas de pensiones no contributivas llevadas a cabo en Argentina, Brasil y México, han encontrado la disminución de la oferta laboral de los adultos mayores e incrementos del consumo de los hogares (13)(14)(15)(16) . Además, aquellos que han evaluado la salud del adulto mayor han hallado efectos positivos en la salud mental, pero no en la salud física (16) .…”

Intended and Unintended Effects of Unconditional Cash Transfers: The Case of Bolivia's Renta Dignidad

“…In the case of Mexico's 70 y más program Galiani, Gertler and Bando (2014) find that the proportion of treated individuals doing paid work is reduced by 20 percent, 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 percent).…”