Another brick on the Wall: On the Effects of Non-Contributory Pensions on Material and Subjective Well Being

Produced by: 
National Bureau of Economic Research
Available from: 
January 2021
Paper author(s): 
Rosangela Bando
Sebastian Galiani
Paul Gertler
Topic: 
Labor
Year: 
2021

Public expenditures on non-contributory pensions are equivalent to at least 1 percent of GDP in several countries in Latin America and is expected to increase. We explore the effect of noncontributory pensions on the well-being of the beneficiary population by studying the Pensiones Alimentarias program established by law in Paraguay, which targets older adults living in poverty. Households with a beneficiary increased their level of consumption by 44 percent. The program improved subjective well-being in 0.48 standard deviations. These effects are consistent with the findings of Bando, Galiani and Gertler (2020) and Galiani, Gertler and Bando (2016) in their studies on the non-contributory pension schemes in Peru and Mexico. Thus, we conclude that the effects of non-contributory pensions on well-being in Paraguay are comparable to those found for Peru and Mexico and add to the construction of external validity.

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