Non-Contributory Pensions

30 Pages Posted: 29 Nov 2013 Last revised: 5 May 2015

See all articles by Sebastian Galiani

Sebastian Galiani

University of Maryland - Department of Economics

Paul J. Gertler

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Rosangela Bando

Inter-American Development Bank

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2015

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.

Keywords: Non-contributory pensions, poverty, well-being

JEL Classification: H4, H3, I1, I3

Suggested Citation

Galiani, Sebastian and Gertler, Paul J. and Bando, Rosangela, Non-Contributory Pensions (May 1, 2015). Available at SSRN: https://ssrn.com/abstract=2360752 or http://dx.doi.org/10.2139/ssrn.2360752

Sebastian Galiani (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

Paul J. Gertler

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-642-1418 (Phone)
510-642-4700 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Rosangela Bando

Inter-American Development Bank ( email )

1300 New York Avenue NW
Washington, DC 20577
United States
202 623 2126 (Phone)

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