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Economic inequality and intergenerational transfers: Evidence from Mexico

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  • Mejía-Guevara, Iván

Abstract

Recent evidence of the National Transfer Accounts (NTA) of Mexico reveals that asset-based reallocations play a significant role in the financing of the expenditures by elderly Mexicans, whereas private and public transfers are used to support most of the expenditures for children. What that evidence does not consider, however, is the fact that differences in socioeconomic status (SES) may seriously distort the reallocation of intergenerational flows. Mexico has long been a country permeated by high levels of inequality, it is then necessary to include its effects in the analysis of intergenerational transfers. Furthermore, age reallocations of economic flows do change over time and such changes might also involve greater economic inequality. In this paper, I assess the effects of SES inequality on the reallocation of intergenerational flows using NTA estimates for two particular years, 1994 and 2004. I show that the reallocation of economic resources, mainly to children and the elderly, by SES changed substantially within this period. The main intergenerational effects associated with SES inequality are: (a) equalizing effects of labor income and remittances, (b) higher progressivity of public cash and educational transfers, and (c) crowding-out effects between private and public transfers among the elderly.

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  • Mejía-Guevara, Iván, 2015. "Economic inequality and intergenerational transfers: Evidence from Mexico," The Journal of the Economics of Ageing, Elsevier, vol. 5(C), pages 23-32.
    • Handle: RePEc:eee:joecag:v:5:y:2015:i:c:p:23-32
    DOI: 10.1016/j.jeoa.2014.09.012
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    1. Herrin, Alejandro N. & Salas, J.M. Ian S. & Abrigo, Michael Ralph M. & Racelis, Rachel H., 2016. "Economic Gain, Age Structure Transition, and Population Groups in the Philippines," Discussion Papers DP 2016-32, Philippine Institute for Development Studies.
    2. Racelis, Rachel H. & Salas, J.M. Ian S. & Herrin, Alejandro N. & Abrigo, Michael R.M., 2016. "Economic Gain, Age Structure Transition, and Population Groups in the Philippines," Research Paper Series DP 2016-32, Philippine Institute for Development Studies.
    3. Abrigo, Michael R.M. & Racelis, Rachel H. & Salas, J.M. Ian & Herrin, Alejandro N., 2016. "Decomposing economic gains from population age structure transition in the Philippines," The Journal of the Economics of Ageing, Elsevier, vol. 8(C), pages 19-27.

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