The schooling repayment hypothesis for private transfers: evidence from the PROGRESA/Oportunidades experiment

The schooling repayment hypothesis for private transfers predicts a positive relationship between the amount of parental investment in children’s education and the amount that adult children transfer to their parents. We provide evidence on the repayment motive using data from the Mexican conditional cash transfer program PROGRESA/Oportunidades (PO). PO pays a transfer to parents for sending their children to school. Thus, if private transfers from adult children to parents are in part repayment for parental schooling investments made in the past, then PO should decrease these transfers—parents were already exogenously compensated by the government for sending their kids to school and not to work. Exploiting the exogenous variation in the amount of cash transfers a household receives from PO for sending its children to school, we compare the private transfers received in 2007 by parental households who had children 0–16 in 1997 and started receiving the programs’ benefits in 1998 with the transfers received by similar parental households who started receiving benefits in 1999. Results suggest a repayment motive exists. That is, PO is causing adult children to transfer less resources to their parents.     

Impact of Public and Private Cash Transfers on Poverty and Inequality: Evidence from Vietnam

This article investigates the extent to which public and private transfers affected poverty and inequality in Vietnam in the mid‐2000s. It finds that the impact of public transfers on poverty was negligible, due to the low coverage of the poor and the relatively small amounts transferred. Moreover, the effect of the receipt of transfers on expenditures was small: recipients decreased the labour supply and only a limited amount of the extra income went to current consumption. Domestic private transfers were somewhat more successful in reducing poverty. With most public and private transfers going to non‐poor households, inequality was only marginally affected.     

Public education provision,private schooling and income redistribution

Availability of free public education induces a transfer in kind among households with school age children. We provide evidence of the redistributive character of public education provision. We estimate structural quantile treatment effects of household income on the distribution of expected educational transfers in kind. Under the assumption that education quality is a normal good, better services (ancillary to the core education mission) supplied by private schools increase quality therein and reduce the incentives for wealthy households to enroll in public education. Because of these incentives, rich families benefit less from educational transfers in kind and the public education system is redistributive. Using household survey data from Italy, we find that an increase in net income reduces the value of the expected educational in kind transfers for compulsory education.     

The political viability of a negative income tax

This paper offers three propositions relating to the political viability of the negative income tax. One, despite its work disincentive, a majority of households would support a linear income tax that makes cash payments to low income households. However two, when government consumption is sufficiently high, a majority would favor a proportional tax over such a tax. Three, under certain conditions, a majority of households will prefer public provision of a private good or an in-kind transfer to a negative income tax. These latter two propositions offer an explanation for the public's apparent distaste for widespread cash transfers. Received: 17 September 1999/Accepted: 21 April 2000     

Do private and public transfers received affect life satisfaction? Evidence from Romania

This paper uses Romanian survey data to investigate the determinants of individual life and financial satisfaction, with an emphasis on the role of public and private transfers received. A possible concern is that these transfers are unlikely to be exogenous to satisfaction. We use recursive simultaneous equations models to account both for this potential problem and for the fact that public transfers are themselves endogenous in the private transfer equation. We find that public transfers received have a positive influence on both life and financial satisfaction, while private transfers do not matter. People receive private transfers irrespective of their economic and demographic characteristics in Romania, which could be explained by some social norm motives.     

The Burden of Medical Debt Faced by Households with Dependent Children in the United States: Implications for the Affordable Care Act of 2010

This paper examines the relationship between the number of dependent children and medical debt outcomes. Results show that the presence of dependent children in the household increased the probability of having any medical debt by 8 % for “high” financial burden households, 4 % for households at the 50th percentile of the income distribution and 3 % for privately insured households. The amount of medical debt by households at the 75th percentile of the income distribution was also increased. These findings show that the number of dependent children in the household was associated with medical debt for households in the middle of the income distribution. These results may be explained by the fact that those households at the lower tail of the income distribution are more likely to have public coverage, which tends to have lower cost sharing compared to those with private insurance.     

Social network capital, economic mobility and poverty traps

This paper explores the role social network capital might play in facilitating poor agents?? escape from poverty traps. We model and simulate endogenous link formation among households heterogeneously endowed with both traditional and social network capital who make investment and technology choices over time in the absence of financial markets and faced with multiple production technologies featuring different fixed costs and returns. We show that social network capital can either complement or substitute for productive assets in facilitating some poor households?? escape from poverty. However, the voluntary nature of costly link formation also creates exclusionary mechanisms that impede some poor households?? use of social network capital. Through numerical simulation, we show that the ameliorative potential of social networks therefore depends fundamentally on the broader socio-economic wealth distribution in the economy, which determines the feasibility of social interactions and the net intertemporal benefits resulting from endogenous network formation. In some settings, targeted public transfers to the poor can crowd-in private resources by inducing new social links that the poor can exploit to escape from poverty.     

There’s no such thing as a free lunch: evidence of altruism and agency from household expenditure responses to child nutrition programs

Transfers for particular client groups such as children are often in-kind rather than cash. However, this may, at least partially, crowd out private expenditures on the goods in question because they reduce the incentive for other individuals, like parents, to make altruistic transfers. They are often made to one household member on behalf of another so there may also be agency concerns. This paper uses three nutrition programs for children in UK households to cast light on altruism and agency effects.     

Interhousehold Transfers of Goods and Services and Reported Well-Being Among Polish Households

Analyses of data from 600 households in the province of Lubin, Poland, five years after the economic transformation indicated the transfers of goods and services between households to be quite prevalent, with households with high levels of resources giving goods and services and those with low levels of resources receiving goods and services. The receipt of such transfers does not improve the living conditions of the receiving households relative to those who do not receive help; in fact, those receiving help report lower levels of satisfaction than those not receiving assistance.     

Targeting and child poverty

We examine the relative merits of targeting children within the household through price subsidies and cash transfers. To do so, we model the behavior of a household composed of one adult and one child. We then show that ‘favorable’ distortions from price subsidies may allow redistributing toward the child and then derive the conditions under which this redistributive scheme is more efficient than cash transfers. The framework is extended to account for possible paternalistic preferences of the social planner and for households composed of two adults with different preferences. Applied to a continuum of households, our approach is extended to the problem of child poverty alleviation. In contrast to the traditional view, we show that well-chosen subsidies may be more cost effective than cash transfers in reducing child poverty.     

Altruism and monetary transfers in the household: inter- and intra-generation issues

The literature on altruism and monetary transfers in the household is here extended with new and recent evidence on different approaches with the final aim being to provide policy recommendations in order to reduce socio-economic inequality among households, from both inter- and intra-generational perspectives. Thus, we include issues which deal with transfers from parents to kids (downstream transfers), and with transfers from kids to parents (upstream transfers). On the other hand, we also include issues from intragenerational transfers beyond the household, studying such phenomena as charitable donations and remittances from migrants.     

Inheritances and the distribution of wealth or whatever happened to the great inheritance boom?

Using data from the Survey of Consumer Finances (SCF), we found that on average over the period from 1989 to 2007, about one fifth of American households at a given point of time reported a wealth transfer and these accounted for quite a sizeable figure, about a quarter of their net worth. Over the lifetime, about 30 percent of households could expect to receive a wealth transfer and these would account for close to 40 % of their net worth near time of death. However, there is little evidence of an inheritance “boom.” In fact, from 1989 to 2007, the share of households reporting a wealth transfer fell by 2.5 percentage points, a time trend statistically significant at the one percent level. The average value of inheritances received among all households did increase but at a slow pace, by 10 %; the time trend is not statistically significant. Wealth transfers as a proportion of current net worth fell sharply over this period, from 29 to 19 %, though the time trend once again is not statistically significant. We also found that inheritances and other wealth transfers tend to be equalizing in terms of the distribution of household wealth, though a number of caveats apply to this result.     

Household Structure and Short‐Run Economic Change in Nicaragua

During the economic crises Nicaragua suffered between 2000 and 2002, a conditional cash transfer program targeting poor households began operating. Using panel data on 1,397 households from the program's experimentally designed evaluation, we examined the impact of the program on household structure. Our findings suggest that the program enabled households to avoid reagglomeration during the economic crises, with households in control communities growing more than treated households. These changes were driven primarily by shifts in residence of relatively young men and women with close kinship ties to the household head. In contrast, households that received transfers continued to send off young adult members, suggesting that the program provided resources to overcome the short‐term economic pressures on household structure.     

AGING OUT OF WOMEN INFANTS AND CHILDREN: AN INVESTIGATION OF THE COMPENSATION EFFECT OF PRIVATE NUTRITION ASSISTANCE PROGRAMS

This paper is the first to address the causal relationship between an abrupt change in the availability of public nutrition assistance and low-income households' private nutrition assistance utilization. In particular, we examined the way in which loss of Women Infants and Children (WIC) benefits impacted a household's utilization of private food assistance. Using a regression discontinuity analysis framework, we found that households significantly increased utilization of private nutrition assistance following an abrupt loss in public nutrition assistance. Estimates indicated that some households might have been able to compensate from about half to more than 90% of their loss in public WIC nutrition assistance. (JEL I38, C36, D12)     

A post-crisis assessment of retirement income adequacy for Baby Boomers and Gen Xers

DETERMINING THOSE "AT RISK" OF INSUFFICIENT RETIREMENT INCOME: The analysis in this paper was designed to answer two questions: 1) What percentage of U.S. households became "at risk" of insufficient retirement income as a result of the financial market and real estate crisis in 2008 and 2009? 2) Of those who are at risk, what additional savings do they need to make each year until retirement age to make up for their losses from the crisis? The results are from the 2010 EBRI Retirement Security Projection Model by the Employee Benefit Research Institute. KEY FINDINGS: Range at risk: The percentage of households that would not have been "at risk" without the 2008-2009 crisis but that ended up "at risk" varies from a low of 3.8 percent to a high of 14.3 percent. 50-50 chance of adequacy: Looking at all Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), the median percentage of additional compensation for these households desiring a 50 percent probability of retirement income adequacy would be 3.0 percent of compensation each year until retirement age to account for the financial and housing market crisis in 2008 and 2009. 90 percent chance of adequacy: Looking at all Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), the median percentage of additional compensation for these households desiring a 90 percent probability of retirement income adequacy would be 4.3 percent of compensation. Range of adequacy: Looking only at Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), that had account balances in defined contribution plans and IRAs as well as exposure to the real estate crisis in 2008 and 2009 shows a median percentage for of 5.6 percent for a 50 percent probability and 6.7 percent for a 90 percent probability of retirement income adequacy.     

Forced Migration and Changing Livelihoods in the Brazilian Amazon

Forced migration due to development projects or environmental change impacts livelihoods, as affected households are faced with new—and often less favorable—environmental, social, and economic conditions. This article examines changing livelihood strategies among a population of rural agricultural households displaced by the Belo Monte Dam in the Brazilian Amazon. Using longitudinal data, I find that many households used compensation payments to concentrate income generation efforts on the most lucrative strategies—cacao and cattle production and business or rental income. Poorer households and those that received the least compensation were more likely to continue relying on agricultural wage labor—a less desirable income source associated with not owning land or with persons needing to supplement income with additional work as a day laborer. Results also indicate that the amount of compensation received by most households was sufficient to enable them to make productive investments beyond attaining replacement land and housing. Many households invested in assets such as agricultural infrastructure, cattle, rental houses, or tractors—all of which directly contribute to future income. Displacement compensation, similar to remittances or conditional cash transfers, can therefore act as an important infusion of capital to promote socioeconomic development and poverty reduction.     

The Use of Remittance Income in Mexico

Immigration affects sending countries through the receipt of remittance income. The impact of these cash transfers on households and communities has brought attention to remittances as a development mechanism. This study attempts to understand the degree to which household consumption is affected by the receipt of remittance income and the ways in which the broader communities may be impacted. Using household income and expenditure data for Mexico, expenditure patterns of remittance‐receiving households are analyzed. Regression analysis indicates that remittance‐receiving households spend a greater share of total income on durable goods, healthcare, and housing.     

Private Financial Transfers,Family Income,and the Great Recession

Using longitudinal data from the Fragile Families and Child Wellbeing Study (N = 4,701; 1998–2010), the authors studied whether the unemployment rate was associated with private financial transfers (PFTs) among urban families with young children and whether family income moderated these associations. They found that an increase in the unemployment rate was associated with greater PFT receipt and that family income moderated the association. Poor and near‐poor mothers experienced increases in PFT receipt when unemployment rates were high, whereas mothers with incomes between 2 and 3 times the poverty threshold experienced decreases. Simulations estimating the impact of the Great Recession suggest that moving from 5% to 10% unemployment is associated with a 9‐percentage‐point increase in the predicted probability of receiving a PFT for the sample as a whole, with greater increases in predicted probabilities among poor and near‐poor mothers.     

Horizontal Inequities in the German Tax-Benefit-System: The Case of Two Wage-Earner Employee Households

The question of how horizontal equity between families in the tax-benefit-system is affected by the within-household distribution of earnings has not been systematically analyzed so far. Using an arithmetic model accounting for all relevant parts of the German tax-benefit-system we explored this aspect in detail. From our calculations it became evident that the combined burden of taxes, social security contributions, and transfers was significantly affected by the distribution of earnings between spouses and that the effect differs with respect to total household income. Overall, the German tax-benefit-system favors an unequal income distribution within the household. Applying the model on empirical data taken from the most recent German Income and Expenditure Survey, we were able to quantify these effects. According to our results, total disposable income of the households analyzed would increase by about €5.5 billion per year if all wage income within households would be allocated to a single-earner.     

Are equalization payments making Canadians better off? A two-dimensional dominance answer

This article provides a robust normative appraisal of the Canadian equalization transfers system. The two-dimensional dominance criteria introduced by Atkinson and Bourguignon (RES, 1982) are used to compare the distributions of private and public goods before and after equalization payments. Because the distribution before equalization is not observable, it is simulated on the basis of various scenarios that specify both its financing by the federal government and its utilization by provincial governments. The main result of the paper is that, for most scenarios, equalization transfers have an ambiguous normative impact on the distribution of well-being among Canadians and that, for some scenarios, equalization transfers actually worsen this distribution of well-being.