Who benefits from public old age pensions? Evidence from a targeted program

Abstract

Elliott Fan examines the extent to which the introduction of an important pension reform called the Farmer's Pension Program (FPP) in Taiwan in the mid-1990s induced crowding out of private transfers given to the pension-aged farmers covered by the scheme. Regarding the remaining three eligibility requirements, while the age threshold demanded by the first restriction is exogenous, the second and third restrictions are related to an individual's decision to register as a farmer in order to be eligible for the FPP benefit. Elliott examines whether the provision of FPP altered the probability that a pensioner's adult child provides remittance. The examination of the children's transfer decisions serves as a crucial robustness check on the findings from the traditional perspective that focuses exclusively on transfers received by pensioners. Positive effect of FPP on recipients' household consumption, and the estimated marginal effect is between 41 and 115 cents per dollar of pension.