Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215481 
Year of Publication: 
2020
Series/Report no.: 
GLO Discussion Paper No. 505
Publisher: 
Global Labor Organization (GLO), Essen
Abstract: 
Precipitated by rapid globalization, rising inequality, population growth, and longevity gains, social protection programs have been on the rise in low- and middle-income countries (LMICs) in the last three decades. However, the introduction of public benefits could displace informal mechanisms for riskprotection, which are especially prevalent in LMICs. If the displacement of private transfers is considerably large, the expansion of social protection programs could even lead to social welfare loss. In this paper, we critically survey the recent empirical literature on crowd-out effects in response to public policies, specifically in the context of LMICs. We review and synthesize patterns from the behavioral response to various types of social protection programs. Furthermore, we specifically examine for heterogeneous treatment effects by important socioeconomic characteristics. We conclude by drawing on lessons from our synthesis of studies. If poverty reduction objectives are considered, along with careful program targeting that accounts for potential crowd-out effects, there may well be a net social gain.
Subjects: 
life cycle
retirement
social protection
developing countries
crowdout effect
inter vivos transfers
JEL: 
D64
H31
H55
J14
J22
J26
O15
O16
R2
Document Type: 
Working Paper

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