Author ORCID Identifier
0000-0001-8069-4900
Document Type
Working Paper
Publication Date
Spring 3-25-2020
Keywords
social protection; public program benefits; developing countries; LMICs; crowd-out effect; inter vivos transfers
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 risk-protection, 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 socio-economic 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.
Recommended Citation
Nikolov, Plamen and Matthew Bonci. 2020. "Do Public Program Benefits Crowd Out Private Transfers in Developing Countries? A Critical Review of Recent Evidence" Binghamton University ORB Working Papers, Economics Research Series 2020. Mimeo.
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