THE EFFECT OF NONCONTRIBUTORY PENSIONS ON SAVING IN MEXICO

Catalina Amuedo‐Dorantes, Laura Juarez and Jorge Alonso
Authors registered in the RePEc Author Service: Catalina Amuedo-Dorantes

Economic Inquiry, 2019, vol. 57, issue 2, 931-952

Abstract: This paper examines the effects of noncontributory pension programs at the federal and state levels on Mexican households' saving patterns using micro data from the Mexican Income and Expenditure Survey. We find that the federal program curtails saving among households whose oldest member is either 18–54 or 65–69 years old, possibly through anticipation effects, a decrease in the longevity risk faced by households, and a redistribution of income between households of different generations. Specifically, these households appear to be reallocating income away from saving into human capital investments, like education and health. Generally, state programs have neither significant effects on household saving, nor does the combination of federal and state programs. Finally, with a few exceptions, noncontributory pensions have no significant impact on the saving of households with members 70 years of age or older—individuals eligible for those pensions, plausibly because of their dissaving stage in the lifecycle. (JEL D14, J26, O12, H55)

Date: 2019
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Citations: View citations in EconPapers (2)

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https://doi.org/10.1111/ecin.12750

Related works:
Working Paper: The Effect of Non-contributory Pensions on Saving in Mexico (2016)
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