The Unintended Effects of Social Pensions on Migration: Evidence from Rural Mexico

Prior research on social pensions and other social protection programs has shown that public cash transfers (CTs) may alter the economic behavior of households, including labor supply and labor migration decisions of individuals residing within them. This study exploits the variation in the age eligibility criteria of Mexico's Pension para Adultos Mayores (PAM) Program and employs a difference-in-difference (DID) strategy that examines the impact of noncontributory pensions on domestic and international migration behaviors within multigenerational rural households. Employing data from the Encuesta Nacional de Ocupacion y Empleo (ENOE) for the 2010-2016 period, the analysis shows that PAM eligibility of one member in a household increases the probability of other members of the household migrating internationally. While it does not seem to affect domestic migration, results suggest that it also crowds out domestic remittances. These findings have important policy implications and further our understanding of the determinants of intra-household labor migration decision-making.