The Effect of an Old-Age Demogrant on the Labor Supply and Time Use of the Elderly and Non-Elderly in Mexico

Abstract

This paper estimates the effect of a generous demogrant for individuals age 70 and older that started in 2001 in Mexico City on the labor supply and time use of beneficiaries and of non-elderly family members who live with them. Using a triple differences approach, I find that the program has no significant effect on the time use of eligible individuals, except for the sharp decrease in the housework participation of elderly women who live with another potential beneficiary. Individuals 60 to 69 years old change their time use only if they live with a potential beneficiary, but not because they expect to receive the demogrant themselves in a few years. In particular, men in their 60s seem to retire early if they live with someone who qualifies for the transfer. Both men and women 18 to 59 years old increase their labor supply if they live with an eligible man, but decrease it if they live with an eligible woman. These results are consistent with income in the hands of elderly women being shared more with younger family members than income in the hands of elderly men.

The Effects of a Noncontributory Pension Program on Labor Force Participation: The Case of 70 y Más in Mexico

“…In these estimations, our key regressor is the interaction of the number of age-qualifying individuals in the household with the dummy for a treated locality, which captures both household eligibility for 70 y Más and variation in the amount potentially received from the program. In the literature, given that resources owned by women are often found to have different effects than those owned by men, it is standard to further control for the gender of the beneficiary, as in Bertrand, Mullainathan, and Miller (2003), Juárez (2010), and Edmonds (2006). However, for our samples of prime-age adults and adolescents, we only find significant differences in the program's effect by beneficiary's gender for boys age 12-17.…”

“…8 Other mechanisms through which non-contributory pensions end up benefiting younger individuals are the nutrition and schooling and children (Duflo 2003, Edmonds 2006, Gutierrez and Rubli 2011 and family transfers (Jensen 2004, Juárez 2009, AmuedoDorantes and Juárez 2012, Fan 2010.…”

Crowding out of private support to the elderly: Evidence from a demogrant in Mexico

“…The results, available from the author, are consistent with those obtained using the IV Tobit. Reduced-form estimations including the instruments directly in the transfer equations also yield comparable results 23 .…”

“…Juarez (2007) …nds that the Mexico City demogrant has a negative and signi…cant e¤ect on the time devoted to housework by potential bene…ciaries, and a positive, but not signi…cant, e¤ect on their leisure hours 22 . Estimating the e¤ect of the program on other outcomes of interest, like health or mortality, is beyond the scope of this paper, but it is certainly necessary to make a broader assessment of the program.…”

The Effect of a Transfer Program for the Elderly in Mexico City on Co-Residing Children's School Enrollment

“…First, government programs for the elderly that are parallel to traditional social security have recently expanded in Mexico and other developing countries, due to large fraction of individuals that do not qualify for a contributory pension. In addition to investigating the effects on the economic outcomes of the direct beneficiaries of such programs, some studies have shown that public resources paid to the elderly are shared with younger individuals through the crowding out of private transfers (Jensen (2004); Juarez (2009)), reductions in labor supply (Bertrand et al (2003); Juarez (2010)) and human capital investments (Edmonds (2006); Duflo (2003)). Second, given that eligibility for many of such programs is exclusively conditioned on age, these transfers constitute an anticipated increase in permanent income for individuals who are close to eligibility age.…”