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Can a small social pension promote labor force participation ? evidence from the Colombia Mayor program

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  • Pfutze,Tobias
  • Rodriguez Castelan,Carlos

Abstract

One of the primary motivations behind the establishment of noncontributory pension programs is to allow beneficiaries to retire from the labor force. Yet, as with other unconditional cash transfer schemes, their aggregate effects may be more complex. Using panel data and instrumental variable techniques, this paper shows that the effect of one such program, Colombia Mayor, has been to raise the labor force participation of relatively younger male beneficiaries. This increase occurred precisely in the occupations with characteristics that are likely to require some up-front investment. The paper concludes that the transfer effectively loosened the liquidity constraints to remaining in these occupations. However, no such effect is found among women or older beneficiaries.

Suggested Citation

  • Pfutze,Tobias & Rodriguez Castelan,Carlos, 2015. "Can a small social pension promote labor force participation ? evidence from the Colombia Mayor program," Policy Research Working Paper Series 7516, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7516
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    1. José Luis Iparraguirre, 2020. "Economics and Ageing," Springer Books, Springer, number 978-3-030-29019-1, December.
    2. Ce Shen & Jessica Johnson & Zhenhe Chi & John B. Williamson, 2020. "Does a universal non‐contributory social pension make sense for rural China?," International Social Security Review, John Wiley & Sons, vol. 73(2), pages 3-26, April.

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    More about this item

    Keywords

    Labor Markets; Population Policies; Poverty Monitoring&Analysis; Debt Markets; Labor Policies;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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