The Effect of Social Entitlement Programs on Private Transfers: New Evidence of Crowding Out

28 Pages Posted: 23 Jul 2010 Last revised: 5 Jul 2014

See all articles by Kristopher Gerardi

Kristopher Gerardi

Federal Reserve Bank of Atlanta

Yuping Tsai

Spelman College

Multiple version iconThere are 2 versions of this paper

Date Written: August 22, 2010

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 (IV) 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).

Keywords: Private Transfers, Public Transfers, Crowding Out

Suggested Citation

Gerardi, Kristopher S. and Tsai, Yuping, The Effect of Social Entitlement Programs on Private Transfers: New Evidence of Crowding Out (August 22, 2010). Available at SSRN: https://ssrn.com/abstract=1646968 or http://dx.doi.org/10.2139/ssrn.1646968

Kristopher S. Gerardi

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-498-8561 (Phone)

HOME PAGE: http://sites.google.com/site/kristophergerardishomepage/

Yuping Tsai (Contact Author)

Spelman College ( email )

350 Spelman Lane S.W.
Atlanta, GA 30314-4399
United States

HOME PAGE: http://sites.google.com/site/yupingt/

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