Preferences for Redistribution in Europe

in IZA Journal of European Labor Studies (2015), 4(14), 1-18

This paper uses pseudo panel techniques and a fixed effects estimator to analyse the determinants of preferences for redistribution in 34 European countries over the period 2002–2012. The data is drawn ... [more ▼]

This paper uses pseudo panel techniques and a fixed effects estimator to analyse the determinants of preferences for redistribution in 34 European countries over the period 2002–2012. The data is drawn from the six available waves of the European Social Survey. The main result is that changes in income inequality positively affect changes in preferences for redistribution over time. Though this result is predicted by standard political economy models, it has found little previous empirical support. This study shows that, at least in Europe, growing income inequality leads to more individual support for redistribution. The empirical results hold after performing a variety of robustness checks regarding the construction of pseudo panels, the use of lags and different measures of income inequality. [less ▲]

Well-being differences in old-age in Europe: the Active Ageing Index by cohorts

E-print/Working paper (2015)

The goal of this paper is to study and explain the differences in wellbeing in old age across cohorts and countries in Europe. This is done with the replication of the Active Ageing Index for cohorts ... [more ▼]

The goal of this paper is to study and explain the differences in wellbeing in old age across cohorts and countries in Europe. This is done with the replication of the Active Ageing Index for cohorts formed by age group, sex and country for 2012. The analysis is performed with different model regressions at the cohort level and introducing macro variables at the country level. In general, there is a gap in active ageing in detriment of females which is larger in older cohorts. In addition, wealth, equity and pension settings of the country are important predictors for better active ageing. Finally, it is found that the Social-Democratic welfare regime (Nordic countries) with its set of strong redistributive policies, is the most favourable system for active ageing. [less ▲]

Changes in Inequality and Generalized Trust in Europe

in Social Indicators Research (2015), 124(1), 21-41

This paper analyses the determinants of trust in a pool of 34 European countries over the period 2002–2012. We find that income inequality is negatively related with generalized trust when we analyze the ... [more ▼]

This paper analyses the determinants of trust in a pool of 34 European countries over the period 2002–2012. We find that income inequality is negatively related with generalized trust when we analyze the pooled data of individuals with multilevel models, confirming a well-established result in the analysis of cross-country differences in trust. However, we are unable to find the same significant relationship when we estimate fixed effects models with a panel dataset composed by countries. It is plausible that unobserved effects may account for the significant and negative relationship between economic inequality and trust at the cross-sectional level. In contrast, in the fixed effects models, we find negative and significant effects of ethnic and linguistic fractionalization, discrimination (general or based on migrant status) and crime rates on trust. [less ▲]

Is low fertility really a problem? Population aging, dependency, and consumption

in Science (2014), 346(6206), 229-234

Longer lives and fertility far below the replacement level of 2.1 births per woman are leading to rapid population aging in many countries. Many observers are concerned that aging will adversely affect ... [more ▼]

Longer lives and fertility far below the replacement level of 2.1 births per woman are leading to rapid population aging in many countries. Many observers are concerned that aging will adversely affect public finances and standards of living. Analysis of newly available National Transfer Accounts data for 40 countries shows that fertility well above replacement would typically be most beneficial for government budgets. However, fertility near replacement would be most beneficial for standards of living when the analysis includes the effects of age structure on families as well as governments. And fertility below replacement would maximize per capita consumption when the cost of providing capital for a growing labor force is taken into account. Although low fertility will indeed challenge government programs and very low fertility undermines living standards, we find that moderately low fertility and population decline favor the broader material standard of living. [less ▲]

The ex-ante effects of non-contributory pensions in Colombia and Peru

in Journal of International Development (2014), 26(7), 949-973

This paper studies the ex-ante effects of the implementation of a Non-Contributory Pension (NCP) program in Colombia and Peru. Relying on household survey data, we simulate the transfer’s potential impact ... [more ▼]

This paper studies the ex-ante effects of the implementation of a Non-Contributory Pension (NCP) program in Colombia and Peru. Relying on household survey data, we simulate the transfer’s potential impact on poverty, inequality, fiscal cost, and the probability of affiliation to contributory pensions. Our results show that a NCP reduces poverty and inequality among the elderly, particularly in rural areas, at an arguably limited fiscal cost. Regarding behavioural effects, there is not a large impact on the probability of affiliation to contributory pensions when the program is targeted to the poor, with the exception of Peruvian women. Finally, we also compute some potential effects on the recipient’s labour supply. [less ▲]

El déficit del Ciclo de Vida en Peru: Una Estimación con el Sistema de Cuentas Nacionales de Transferencias

in Notas de Poblacion (2014), 98

Este estudio presenta la estimación del ciclo de vida para Perú con datos del año 2007 dentro del marco del proyecto sobre Cuentas Nacionales de Transferencias (CNT). Las CNT son una herramienta útil para ... [more ▼]

Este estudio presenta la estimación del ciclo de vida para Perú con datos del año 2007 dentro del marco del proyecto sobre Cuentas Nacionales de Transferencias (CNT). Las CNT son una herramienta útil para monitorear el alcance del llamado bono demográfico mediante la construcción de la tasa de dependencia económica (TDE) y un criterio adicional para el Estado a fin que pueda priorizar en el mediano plazo sus decisiones de inversión en capital humano. Al respecto, se incluye un ejercicio para comparar a nivel regional los resultados de la TDE con el indicador tradicional de la tasa de dependencia. [less ▲]

Successful Ageing and Poverty: The case of Peru

E-print/Working paper (2014)

This study investigated the determinants of Successful Ageing (SA) in a sample of 4,151 Peruvians aged between 65 and 80 and living in poverty. The data correspond to the ESBAM survey, which is the ... [more ▼]

This study investigated the determinants of Successful Ageing (SA) in a sample of 4,151 Peruvians aged between 65 and 80 and living in poverty. The data correspond to the ESBAM survey, which is the baseline to evaluate the non-contributory public pension program Pension 65. A key contribution of this study is to combine the conceptual appealing of Successful Ageing to measure well-being in old-age with the multidimensional poverty counting approach developed in the economic literature. This setting allows for moving beyond the dichotomy of the SA literature (success or usual ageing) and take advantage of the full distribution of success along the set of dimensions of well-being. Nine indicators of SA have been used to assess the dimensions of physical health, functioning, cognition, emotional health, and life satisfaction. The variables associated with a higher number of satisfied indicators were being a male, younger, literate, working, low food insecurity, good nutritional status, normal blood pressure, absence of disabilities, not smoking, empowerment, good self-esteem, absence of mental disability, and less frequent contact with a social network. From a policy perspective, the results of this study report a remarkably stable effect of three variables affecting SA that can be relatively easy to measure, monitor and affect by public intervention. These variables are food security, nutrition quality, and self-esteem. [less ▲]

The Welfare State and Anti-Poverty Policy in Rich Countries

E-print/Working paper (2014)

This paper is prepared as a chapter for the Handbook of Income Distribution, Volume 2 (edited by A. B. Atkinson and F. Bourguignon, Elsevier-North Holland, forthcoming). Like the other chapters in the ... [more ▼]

This paper is prepared as a chapter for the Handbook of Income Distribution, Volume 2 (edited by A. B. Atkinson and F. Bourguignon, Elsevier-North Holland, forthcoming). Like the other chapters in the volume (and its predecessor), the aim is to provide a comprehensive review of a particular area of research. The aim of this chapter is to highlight some key aspects of recent economic research on the welfare state and anti-poverty policy in rich countries, and explore their implications. We begin with the conceptualisation and measurement of poverty, before sketching out some core features and approaches to the welfare state and anti-poverty policies. We then focus on the central plank of the modern welfare state’s efforts to address poverty, namely social protection, discussing in turn the inactive working-age population, child income support, in-work poverty, and retirement and old-age pensions. After that we discuss social spending on other than cash transfers: the labour market, education, training and activation, and finally intergenerational transmission, childhood and neighbourhoods. We also discuss the welfare state and anti-poverty policy in the context of the economic crisis which began in 2007-8, and the implications for strategies aimed at combining economic growth and employment with making serious inroads into poverty. We conclude with highlighting directions for future research. [less ▲]

Peru

in Rofman, Rafael; Apella, Ignacio; Vezza, Evelyn (Eds.) Mas alla de las Pensiones Contributivas. Catorce experiencias en América Latina (2013)

Old-Age Support and Demographic Transition in Developing Countries. A cultural Transmission Model

E-print/Working paper (2013)

We model intergenerational old-age support within the context of a developing country that faces demographic transition: declining fertility and increasing life expectancy. We attempt to answer if agents ... [more ▼]

We model intergenerational old-age support within the context of a developing country that faces demographic transition: declining fertility and increasing life expectancy. We attempt to answer if agents will be able to support their parents during the next generations and under what conditions. For this purpose we use a three period overlapping generations model and a cultural transmission process, in which agents may be socialized to different cultural family models (old-age supporters and non-supporters). As life expectancy increases, we find conditions under which a reduced fertility rate is compatible with the expectation to be supported during old-age. This offers an additional explanation for the persistency of family old-age support in developing countries facing demographic transsition. [less ▲]