Old-age government transfers and the crowding out of private gifts: the "70 plus" program for the rural elderly in Mexico

Available from: 
October 2013
Paper author(s): 
Laura Juarez (Banco de México)
Catalina Amuedo-Dorantes (San Diego State University)
Fiscal Policy, Public and Welfare Economics

We estimate the crowding out of private transfers caused by 70 y Más –a public assistance program for the rural elderly in Mexico for whom private support is an important source of income. Using data from the Mexican Income and Expenditure Survey and a triple difference approach, we find that the program partially crowds out private gifts by reducing the probability of receiving domestic remittances. Specifically, the non-labor income of the program beneficiaries increases by 30 percent less than their government transfers. Thus, by reducing their private transfers to the elderly, domestic donors are dampening the effect of the program, although not completely neutralizing it.


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Research section: 
Lacea 2013 annual meeting
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