Working Paper: NBER ID: w19775
Authors: Sebastian Galiani; Paul Gertler; Rosangela Bando
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: Noncontributory pensions; Cash transfer programs; Mental health; Labor market participation; Consumption
JEL Codes: H2; H3; I0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cash transfer scheme (H87) | mental health of elderly adults (I12) |
| cash transfer scheme (H87) | paid work engagement (J33) |
| cash transfer scheme (H87) | consumption expenditures (E20) |
| anticipation effects (D84) | labor earnings (J31) |
| anticipation effects (D84) | savings behaviors (D14) |