The Effect of Social Entitlement Programs on Private Transfers: New Evidence of Crowding Out
Economica 81, October 2014, pp.721-746
Posted: 7 Feb 2013 Last revised: 7 Oct 2014
Date Written: March 23, 2013
This paper exploits a policy experiment to 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 strategy that accounts for the endogeneity of receiving public transfers, the empirical results show some evidence of crowding out on the extensive margin of private transfers.
Keywords: crowding out, private transfers, Social Security
JEL Classification: I3, J1, H55
Suggested Citation: Suggested Citation