Assessing the Permanent Income Hypothesis in Poor Areas: The Case of Rural Pensions in Brazil

Bruno Kawaoka Komatsu, Lucas Dias and Naercio Menezes-Filho

No 241, Business and Economics Working Papers from Unidade de Negocios e Economia, Insper

Abstract: In Brazil, poor women in family agriculture are entitled to a monthly unconditional pension from the government when they turn 55, a large predictable income increase for rural families. In this paper, we use a national family expenditure survey and a fuzzy regression discontinuity design strategy to estimate the impacts of that pension on consumption, finance and labor market indicators. We show that the pension increases income by 50%, but does not change the consumption of non-durables or food insecurity. Loans repayments rise upon receipt of the pension, which implies that access to credit allowed consumption smoothing. We also find heterogeneity of responses by socioeconomic status, with women with lower education levels driving the result, while those with higher education levels increased their non-durable spending. These findings lend support to the standard life-cycle consumption model, even in very poor environments.

Pages: 37 pages
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://repositorio.insper.edu.br/handle/11224/7250 Full text (text/html)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aap:wpaper:241

Ordering information: This working paper can be ordered from
https://repositorio. ... br/handle/11224/7250

Access Statistics for this paper

More papers in Business and Economics Working Papers from Unidade de Negocios e Economia, Insper Contact information at EDIRC.
Bibliographic data for series maintained by Biblioteca Telles ().