Panel Paper: Do Non-Contributory Pensions Encourage Migration? Evidence from Mexico

Saturday, November 9, 2019
Plaza Building: Concourse Level, Plaza Court 3 (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Ana Paula Canedo, University of Texas, Austin

Prior research on social pensions and other social protection programs has shown that public cash transfers may alter the household’s economic behavior, including labor supply and labor migration decisions of individuals residing within the household. This study exploits the variation in the age-eligibility criteria of Mexico’s Pensión para Adultos Mayores (PAM) Program and employs a difference in difference (DID) strategy to examine the impact of noncontributory pensions on migration and return migration decisions at the household level. Based on data from the Encuesta Nacional de Ocupación y Empleo (ENOE) for the 2012-2015 period, the analysis shows that the program increased international migration within rural households while it had no effect on households inhabiting localities with more than 2,500 residents. Conversely, social pension receipt had no impact on internal and return migration decisions within the household, even after taking into account urban-rural differences. These findings have important implications for understanding the determinants of intra-household labor migration decision-making and whether cash benefits from social pensions have unintended consequences that could be crucial to the design of effective social and immigration policy in Mexico.