How public subsidy programs are associated with intergenerational money transfers.

Gilbert Brenes-Camacho, Universidad de Costa Rica
William H. Dow, University of California, Berkeley

Intergenerational transfers are conditioned by both availability of kin, and Welfare State policies aimed to the elderly. This paper explores the association between changes in the amount of subsidies given to the elderly and the amount of money transfers given and received by them. Analyses are based on data from CRELES, a longitudinal study of aging in Costa Rica. The analyses work with the advantage of having a sort of natural experiment design, given that the Costa Rican Government raised the amount of public subsidies for the poor in 100% before July 2007, and 200% after that date. Using tobit models, we find that, after the increase, non-contribution pension earners significantly received on average less money and gave on average more money than other groups. Results suggest that intergenerational transfers can be affected by Welfare policies, and money transfers towards the elderly might be used to compensate for economic need.