Abstract

ABSTRACT:

One of the primary motivations behind the establishment of noncontributory pension programs is to allow beneficiaries to retire from the labor force. Yet their aggregate effects may be more complex. One such program, Colombia Mayor, stands out for its low eligibility age. Given that beneficiaries are not required to leave the labor force, it practically constitutes a fixed income—an unconditional cash transfer of sorts—to a still economically active population. Using panel data and instrumental variable techniques, this paper shows that the effect of this program has been to raise the labor force participation of relatively younger, particularly male, beneficiaries. This increase occurred precisely in the occupations with characteristics that are likely to require some up-front investment and for the comparatively poorer. We conclude that the transfer effectively loosened the liquidity constraints to remaining in these occupations. No such effect is found for older beneficiaries.

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Additional Information

ISSN
1533-6239
Print ISSN
1529-7470
Pages
pp. 111-154
Launched on MUSE
2019-12-16
Open Access
No
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