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Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam

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  • Chung Tran

    (Indiana University Bloomington)

Abstract

In this paper, I analyze the crowding-out effects of public transfers on labor supply of the elderly in the context of developing countries. I argue that the interactions between private transfers received and labor supplied by the elderly affect the opportunity cost of retirement and, therefore, magnify the crowding-out effects of public transfers on the labor supply of the elderly. Using household survey data from Vietnam, I find the evidence supporting this hypothesis. That is, the crowding-out effect is about two times larger when accounting for the endogeneity of private transfers, which is caused by the interactions of private transfers and the labor supply.

Suggested Citation

  • Chung Tran, 2008. "Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam," CAEPR Working Papers 2008-018, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    • Handle: RePEc:inu:caeprp:2008018
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    References listed on IDEAS

    as
    1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    2. Jung, Juergen & Tran, Chung, 2012. "The extension of social security coverage in developing countries," Journal of Development Economics, Elsevier, vol. 99(2), pages 439-458.
    3. Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 1999. "Social Security in an Overlapping Generations Economy with Land," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(3), pages 638-665, July.
    4. Deborah Cobb-Clark & Lisa A Cameron, 2005. "Do Coresidency with and Financial Transfers from Children Reduce the Need for Elderly Parents to Work in Developing Countries?," CEPR Discussion Papers 508, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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    Cited by:

    1. Jung, Juergen & Tran, Chung, 2012. "The extension of social security coverage in developing countries," Journal of Development Economics, Elsevier, vol. 99(2), pages 439-458.
    2. Jung, Juergen & Tran, Chung, 2022. "Social health insurance: A quantitative exploration," Journal of Economic Dynamics and Control, Elsevier, vol. 139(C).

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    More about this item

    Keywords

    Altruism; Crowding-out; Social Security; Retirement; Transfers;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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