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Do Private Household Transfers to the Elderly Respond to Public Pension Benefits? Evidence from Rural China

Plamen Nikolov and Alan Adelman

No 2019-053, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: Aging populations in developing countries have spurred the introduction of public pension programs to preserve the standard of living for the elderly. The often-overlooked mechanism of intergenerational transfers, however, can dampen these intended policy effects, as adult children who make income contributions to their parents could adjust their behavior in response to changes in their parents’ income. Exploiting a unique policy intervention in China, we examine using a difference-in-difference-in-differences (DDD) approach how a new pension program impacts inter vivos transfers. We show that pension benefits lower the propensity of adult children to transfer income to elderly parents in the context of a large middle-income country, and we also estimate a small crowd-out effect. Taken together, these estimates fit the pattern of previous research in high-income countries, although our estimates of the crowd-out effect are significantly smaller than previous studies in both middle- and high-income countries.

Keywords: life cycle; retirement; pensions; inter vivos transfers; middle-income countries; developing countries; China; crowd-out effect; aging (search for similar items in EconPapers)
JEL-codes: D64 O15 O16 J14 J22 H55 R20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dem and nep-tra
Date: 2019-08
Note: ECI
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Downloads: (external link)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Nikolo ... s-pensions-china.pdf First version, August, 2019 (application/pdf)

Related works:
Working Paper: Do Private Household Transfers to the Elderly Respond to Public Pension Benefits? Evidence from Rural China (2019) Downloads
Working Paper: Do Private Household Transfers to the Elderly Respond to Public Pension Benefits? Evidence from Rural China (2019) Downloads
Working Paper: Do Private Household Transfers to the Elderly Respond to Public Pension Benefits? Evidence from Rural China (2019) Downloads
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