Cash transfers to the elderly and its spillover effects Evidences from a non-contributory program in Brazil

South America

Brazil

Social Protection

Pension / Social Security

PR de Oliveira; AL Kassouf; JM de Acquino

2017

Oliveira, Pedro Rodrigues de, Ana Lucia Kassouf, and Juliana Maria de Aquino. “Cash Transfers to the Elderly and Its Spillover Effects: Evidence from a Non-Contributory Program in Brazil.” Journal of Economic Studies (Bradford) 44.2 (2017): 183–205.
View publication

Source: National Household Survey (PNAD 2016). Available at: https://www.ibge.gov.br/pnad.

2017

BPC - Continuing Payment Benefit (English)

2000-2008

The primary purpose of the paper is to present evidence on the spillover effects of a cash transfer addressed to poor elders in Brazil.

Above 65 years old or incapable to work, in addition to attesting a per capita family income no greater than 25 percent of the current Brazilian minimum wage. It is addressed therefore to very poor families.

The program is a non-contributory pension scheme that provides a minimum wage for elders (65 years old or more) and people with disabilities that turn them incapable of independent life and work.

• Households’ living arrangements, labor force participation and weekly worked hours for elders and residents, and labor force participation for children and teenagers that are coresident with elderly participants.

Regression Discontinuity Design.

• Study design/Identification Strategy: the main strategy for evaluating the BPC is to use the age eligibility rule that generates discontinuities on the probability of being treated and, therefore, in the outcomes. The discontinuity arises because poor elders become eligible when they turn 65. This is the current cut-off age, changing over time: it was 70 from 1996 until 1997, 67 until 2003, and 65 until nowadays.


• Sample: The data source is the annual households survey (PNAD) carried out in Brazil from 2001 to 2008. PNAD is carried out every year between the decennial censuses (2000 and 2010) when the sampling is reviewed. The survey includes questions about household composition, characteristics of the household, labor status, earnings, education, and migration, among others.


• Survey Instrument: Over 400,000 individuals are surveyed per year. Some years of the survey include specific supplements with thematic questions about health, child labor, fertility, and social programs, among others. In collaboration with the Ministry of Social Development – MDS, the PNADs included a special supplement on the access of income transfers from governmental social programs in the year 2004 and 2006, including in the questionnaire new questions regarding the Bolsa Familia program, the BPC, and the Child Labor Eradication Program (PETI), among others.

Concerning the number of residents, the authors found an increased number of members between 30 and 49 years old in beneficiaries’ households. This result seems to be concentrated in downturn years. The results show decreases in the coresidents’ labor force participation due to the pension. There is a large decrease in the elderly labor force participation just above the cut-off age and some decrease for adults more than 30 years of age, but no effect for young adults between 18 and 29 years old.

Child Labour

Households

National

The intervention contributes to reducing child labour for those under 16 years-old.

Concerning the number of residents, the authors found an increased number of members between 30 and 49 years old in beneficiaries’ households. This result seems to be concentrated in downturn years. The results show decreases in the coresidents’ labour force participation due to the pension. There is a large decrease in the elderly labour force participation just above the cut-off age and some decrease for adults more than 30 years of age, but no effect for young adults between 18 and 29 years old.

One limitation of the study is that the annually conducted survey (PNAD) does not include specific questions about social programs every year. Thus, there is not a specific question to identify the BPC beneficiaries. Even for those years in which the information is available in a special supplement – 2004 and 2006, it refers to the household only. The authors attempted to identify the program in which an individual is a beneficiary through the eligibility criteria, such as earnings, household income, age, household composition, and the amount of money paid by each governmental program. Another issue is that the authors did not have access to administrative records, so they used the PNAD survey to identify cash transfer beneficiaries and the effects of the benefit on these families. This may lead to issues on the income-eligibility of the sample, once there is a law that establishes income and age eligibilities and there may be non-eligible people receiving the benefit. Applicants fill out a form with their current monthly income, but it is known that there is a high-income variability among poor people, so it is possible that after the benefit was issued, there were changes in the income status within the household before the re-testing.