## Abstract

Living arrangements often reflect important quality-of-life indicators for elderly adults. In particular, increased income can prompt changes in household living arrangements for elderly adults. Using a differences-in-differences approach, we examine whether a supplemental income program in Mexico for adults aged 70 and older influenced household size and composition. We compare outcomes at baseline and at six-month follow-up for elderly adults in the treatment group with those in the control group that did not participate in the program. We find that household size increased by 3% in the treatment group relative to the control group. We also find a statistically significant increase in the number of girls aged 6–11 in the household, likely the granddaughters or great-granddaughters of program recipients. Increases in household size were greatest for adults aged 70–79, couples, households receiving two or more supplemental incomes, and households in the top income tercile. Household size did not increase for households of adults aged 80 and older, singles, households with only one supplemental income recipient, and households not in the top income tercile. These results suggest that when older adults have more income, they use part of this income to house their grandchildren.

## Introduction

Latin America is aging faster than any other region in the world. Between 2015 and 2030, the number of adults aged 60 years and older will increase 71% in Latin America compared with 66% in Asia, 64% in Africa, 41% in North America, and 23% in Europe (United Nations 2015). Mexico is among the fastest aging countries in Latin America. Mexico’s old-age dependency ratio,1 while remaining below that of the United States, is expected to nearly triple, from 11.4 to 32.2, between 2015 and 2050; that in the United States is expected to nearly double, from 24.6 to 40.3 (OECD 2017). High poverty rates among the elderly are complicating this demographic transition in Latin America (Paz et al. 2004). Mexico in particular has the sixth-highest poverty rate (24.7%) among OECD countries for persons above 65 years of age (OECD 2018).

To address growing elderly populations and their high poverty rates, more than 50 low- and middle-income countries have introduced noncontributory pension or supplemental income programs (Newson and Bourne 2011; Willmore 2007). Noncontributory pensions are also called social pensions or unconditional cash transfer programs for older adults. Recipients of such programs make no contributions for the government benefits they receive.2 Many countries in Latin America have introduced and allocated considerable resources for such programs (Levy and Schady 2013).

Previous research has indicated that programs providing additional income to older adults may affect household composition. Programs that increase income of older adults in developed countries, such as the United States, increase the proportion of older adults who live independently (e.g., Costa 1997, 1999), but studies of developing countries have shown more nuanced effects. For example, Chen (2015) found that noncontributory pensions in China decreased shared living with adult sons but not daughters and that assistance from children in general decreased. Hamoudi and Thomas (2014) found that in South Africa, family members with lower levels of education who would likely receive lower wages were more likely than others to move in with pensioners and, presumably, care for them.

Previous research has also examined the support pensioners may provide and how this may affect household composition. Edmonds et al. (2005) found a 7% increase in children aged 5 or younger, a 10% increase in women aged 18–23, and a 10% decrease in women aged 30–39 among South African households with a noncontributory pension recipient. This suggests that pensioners use their additional income to shelter young mothers and their children. In studying South African noncontributory pension recipients, Duflo (2003) found that young girls living with female pensioners experienced anthropometric improvements in weight (for height) and height (for age). Young boys did not experience such improvements, nor were such improvements associated with living with male pensioners.

Previous research also found nuanced results for Mexico. Juarez (2009), analyzing a food assistance program for older adults in Mexico City that provides additional income, found no changes in living arrangements. Gutierrez et al. (2015), using a regression discontinuity design to study the same program in Mexico City, found no changes on household composition at the cutoff age for program eligibility but did find an increase in school enrollment for coresiding children. This suggests that public resources for older adults might benefit other age groups. Previous studies in Mexico analyzing Oportunidades, a conditional cash transfer program for families with children, also found changes in living arrangements. Rubalcava and Teruel (2006) found that recipients are more likely to shelter new members of the extended family who had resided elsewhere, whereas young adults in the recipient household may start their own families and move elsewhere. Stecklov et al. (2005) found that Oportunidades reduces migration to the United States but not domestic migration. Behrman et al. (2005) found that Oportunidades makes males aged 9–15 less likely to leave their household but has no migration effects for girls.

We build on previous research by using a randomized experimental design with individual- and household-level panel data to track changes in living arrangements resulting from a noncontributory pension program in Mexico. Our work may be more generalizable than that on South Africa (Edmonds et al. 2005) given South Africa’s history of apartheid and its effects on housing and living arrangements. Our analysis may be more generalizable than that on China (Chen 2015) given the patriarchal structure of living arrangements in China. Our work may also be more generalizable for Mexico and Latin America because we focus on semi-rural areas, which are home to most Latin American persons, rather than Mexico City. Finally, our research may yield new insights for Mexico given effects on household composition may depend on program recipient. Oportunidades, the subject of much previous research, may, with its payments to mothers with children, have different effects on household composition than a program for older adults would have.

We address the following research questions. Do noncontributory pension programs for the elderly affect household living arrangements? If so, how? Do noncontributory pensions lead to independent living arrangements? Do other household members—including recipients’ children, grandchildren, and great-grandchildren—move after noncontributory pensions are introduced? Our results will improve understanding of the potential effects of noncontributory pensions on recipients’ living arrangements.

## Mexico’s Changing Demographics and Retirement Income Programs

In 1997, Mexico changed its social security system from a defined benefit (DB) system to a defined contribution (DC) system with personal retirement accounts (Aguila 2011). A DB plan is equivalent to a pay-as-you-go system, such as the U.S. Social Security system. Employees and employers make contributions, and employees receive retirement benefits based on their earnings history, tenure of service, and age. In a DC plan, the employer and employee contribute regularly, and individual benefits are based on the amount of money accumulated during the employee’s working life, including investment earnings.

The Mexican DC system includes some redistributive components. First, it includes a minimum pension guarantee. If workers at retirement have accumulated funds that would result in a benefit lower than the monthly minimum wage, then the government provides a subsidy to make up the difference. Second, the government contributes to DC individual retirement accounts: a small amount, called the social quota, equivalent to 5.5% of the minimum wage for Mexico City (Aguila 2011).

The transition to a DC plan likely worsened poverty rates among older Mexicans. One way it may have done so is by increasing eligibility requirements. The reform increased the minimum years of contribution for benefit eligibility from 10 years in the DB system to 25 years in the DC system. Lower-income workers generally have more frequent and longer-lasting spells of unemployment, making qualification for them difficult. They are also more likely to work in the informal labor market, which includes the self-employed and employees in noncompliant small firms not participating in social security programs (Perry et al. 2007). This puts low- and middle-income workers at a higher risk of poverty in old age because such workers are less likely to accumulate enough retirement funds to support themselves or even to meet eligibility requirements for a minimum pension guarantee (Aguila et al. 2011).3 Previous research has confirmed that pension coverage decreased after Mexico’s reforms (Mesa-Lago 2006), whereas the proportion of the population in the informal sector increased (Perry et al. 2007). Today, nearly 60% of workers are in the informal sector (INEGI 2018).

A noncontributory pension system may address these problems by providing a safety net that is independent of labor histories. For example, in the United States, the Supplemental Security Income (SSI) program is a last-resort noncontributory program designed to provide a basic standard of living for low-income older adults (Social Security Administration 2011). Without SSI, poverty among recipient families in 2010 would have been 65% rather than the actual rate of 43% (Center on Budget and Policy Priorities 2014). Most SSI recipients have no other source of income (Center on Budget and Policy Priorities 2019). From this, we infer that a noncontributory pension in Mexico may have a great impact, given that less than one-third of older adults receive social security benefits (Ramírez 2017).

## Living Arrangements and Additional Retirement Income

Housing is but one challenge that Mexico confronts with its older population. Where older adults live and with whom they live will have significant implications for the well-being of Mexican households and the Mexican economy. Residential arrangements, for example, may reflect care arrangements. Litwak and Longino (1987) suggested that as the elderly age and their health declines, they are more likely to move closer to adult children. Bradley (2011) interpreted the older age distribution and greater rates of disability among older movers from Florida to the Northeast as suggesting that older adults move closer to family as their health begins to decline. Even in the absence of adult children, older adults may move in with extended family for companionship during later life. Very few older women without children in Latin America, for example, live alone; most live with extended family (De Vos 2014).

The relationship of household members to older adults can influence mental and physical health. One study of the U.S. elderly found that living alone is associated with a greater probability of experiencing depressive symptoms than those living with spouses or other family members experience (Wilmoth and Chen 2003). Older adults in China who are in their preferred living arrangements have better self-reported health than those who are not (Sereny and Gu 2011). Cultural traditions and social insurance provide resources for encountering such adversities as unemployment or illness (Tosi and Grundy 2018). In Latin America, the lack of unemployment insurance, long-term care services, and private pensions makes families play a fundamental role in providing for the well-being of their members (Bongaarts and Zimmer 2002).

At least three approaches can help us understand how additional income for older adults may lead to changes on household composition: the risk-sharing model, the altruism model, and the exchange model.

According to the risk-sharing model, additional income for older adults enables families to maximize their total production. Family members can ensure one another’s income against uncertain events or income shocks (Kotlikoff and Spivak 1981; Rosenzweig 1988). For example, grandparents taking care of grandchildren can help families smooth fluctuations in resources (Butcher 1993) or minimize living costs and maximize family well-being (Frankenberg et al. 2003). With scarce economic resources and credit constraints, the economies of scale associated with larger households may determine the optimal household size (Salcedo et al. 2012; Zimmer and Kwong 2003). Increased income can also change informal care and household living arrangements for families (Edmonds et al. 2005). For instance, additional income has increased labor force participation of prime working-age women in South Africa (Edmonds et al. 2005) and the United States (Hoerger et al. 1996). In Europe, families have used living arrangements to exchange physical, domestic, in-kind, and monetary assistance with the elderly (De Vos et al. 2004).

According to the altruism model (Becker 1993), parents care about the well-being of children and grandchildren, and they provide more resources to less well-off family members (McGarry and Schoeni 1995). Under this model, additional income of older adults would be negatively correlated with children’s income as parents provide more resources or allow those most in need to coreside with them. Disadvantaged family members are more likely to receive intergenerational transfers than those who are better off (Silverstein et al. 1995). Grandparents may also provide caregiving for grandchildren rather than receive caregiving from their children and assume caregiving roles in response to parents’ needs rather than their own needs (Gonzalez Bernal and de la Fuente Anuncibay 2007).

In the exchange model (Cox 1987), transfers represent an exchange for provision of services from the recipient. Extra income may increase transfers to family members who provide services, allowing such family members to coreside with the older adult. Hamoudi and Thomas (2014) found that pensioners were more likely to live with younger adults who had lower human capital and a lower opportunity cost for providing care to the older adult. Pensioners transfer resources to younger adults in exchange for care services.

Our study expands on Hamoudi and Thomas’s (2014) work by considering the possibility that pensioners might use extra income to reduce transaction costs of providing rather than receiving care. By coresiding with other family members, pensioners can minimize the costs of providing care. Coresiding with other family members, for example, eliminates transportation costs that pensioners may incur for caregiving. Because of their age, pensioners may not be able to provide continuous and consistent care to other family members unless they coreside with them. Hence, pensioners may be more likely to coreside with family members for whom they provide care. Data on composition of households for pensioners would allow us to discern whether pensions affect household living arrangements, particularly for persons who might receive care from older adults.

## Data

For this research, we draw on data collected during implementation of a noncontributory pension program in the Mexican state of Yucatan. In 2007, Yucatan began to implement a noncontributory pension program (Reconocer) for adults aged 70 and older. The program was introduced in three stages. In the first stage, which began in September 2007, noncontributory pensions were implemented in 10 localities with 2,500 to 6,500 inhabitants. In the second stage, which began in December 2007, these pensions were implemented in 16 localities with 6,500 to 20,000 inhabitants. In the third stage, which began in 2008, the pensions were implemented in localities with more than 20,000 inhabitants.

The third stage also featured a cluster randomized control trial design for evaluating the program. This trial provides the data we analyze. Among the 11 localities eligible for the third phase—Hunucma, Kanasin, Uman, Merida, Motul, Oxcutzcab, Progreso, Tekax, Ticul, Tizimin, and Valladolid—a pairwise matching procedure is used to ensure similarity in household and community indicators (as measured by the 2005 census) across pairs of towns. One of the matched pairs was chosen randomly for analysis. Within that pair, one of the localities, Valladolid, was randomly selected to receive the noncontributory pension (treatment), with the other, Motul, selected for the control (comparison) group.

A figure and two tables in the online appendix show how similar Valladolid and Motul are. Figure A1 shows no evidence of different trends in economic development (measured by the Human Development Index, 2000–2010) and income distribution (measured by the Gini coefficient; 1990–2010) for Valladolid and Motul. Table A1, based on data from the 2005 Mexican Census, shows similarities between Valladolid and Motul on a poverty index; in the percentage of adults who are illiterate; and in the percentage of households without a refrigerator, without electricity, or with an earthen floor. Table A2, based on census data from 1990 to 2010 and a regression-based test of differential pretreatment trends between Valladolid and Motul, shows no statistically significant coefficients for the interactions between treatment and year. This implies that the assumption of common trends cannot be rejected for any of the outcomes considered. The joint F test also indicates that the interaction terms before 2010 are not jointly statistically significant. In short, Valladolid and Motul experienced similar overall conditions in economic hardship before, during, and immediately after the implementation of the noncontributory pension. Hence, we can be more confident that evaluations of the noncontributory pension program that detect changes in household composition are a result of the pension and not of other economic changes.

The evaluation survey in both Valladolid and Motul collected data on community, household, and individual characteristics before the program was announced or implemented (baseline) and approximately six months after the program was implemented in Valladolid. Baseline (Wave 1 (W1)) data collection began in August 2008 for Valladolid and in November 2008 for Motul. The follow-up survey (Wave 2 (W2)) was conducted in both Valladolid and Motul from July to September in 2009. The surveys were collected as part of a project between the state of Yucatan and the RAND Corporation. The data are not based on a sample but rather capture virtually all residents 70 or older in Valladolid and Motul.

### Robustness Checks

Potential sources of attrition in our analysis are nonresponse and death. We compared the sociodemographic characteristics of attriters and panel respondents for Valladolid and Motul and differences across both towns. We found no statistically significant differences within Valladolid and Motul. We conducted a similar analysis comparing deceased and panel respondents. We found statistically significant differences within Valladolid and within Motul but few statistically significant differences across towns (see Table A3 in the online appendix). The deceased were older, less educated, and less likely to have worked for pay. The deceased in Valladolid were also slightly older than the deceased in Motul. Overall, these results do not point to attrition bias.

One possible concern for our analysis is that access to other public programs may have changed as a result of introducing the pension program. We found, however, a reduction of only 3.3 percentage points between W1 and W2 in the proportion of older persons in Valladolid receiving Oportunidades (now called Prospera) for elderly adults living in eligible households (see Table A4, online appendix). We did not observe effects on other government programs. Despite a notable difference between the towns in the proportion of households receiving Oportunidades at baseline (11.1% in Valladolid vs. 18.1% in Motul), the validity of the DID estimator rests on the similarity in the change in characteristics across groups over time rather than on their baseline levels (Angrist and Pischke 2009).

Another possible concern for our analysis is the overlap of data collection periods with summer breaks from school. Baseline data collection for Valladolid overlapped local school breaks by one week (August 10–17, 2008) during which 174 data collection interviews were conducted. Baseline data collection did not overlap school breaks in Motul. We conducted the same analysis shown in Table 3 excluding the interviews collected during the summer break week to assess possible bias. The results of this analysis (available on request) were qualitatively and quantitatively unchanged. We also compared our outcome variables at baseline for those interviewed in Valladolid in the one-week overlap period with those interviewed in the month afterward (August 18 to September 19, 2008). Again, we found no statistically significant differences between both groups (results available upon request).

Wave 2 data collection had greater overlaps with local school breaks. In both towns, summer break for primary and high school students was July 3 to August 24, 2009. Wave 2 data collection was July 7 to August 26, 2009, in Valladolid, and July 7 to August 27 in Motul. During these overlap periods, we conducted 1,096 (97.8% of the total) interviews in Valladolid and 741 (93.7%) in Motul. After August 24, we collected 25 surveys in Valladolid and 50 surveys in Motul. If older adults in both towns experienced a similar inflow of children during the summer vacations, then the effect of this temporary inflow would offset any increase we found among households interviewed after August 24. We conducted the same analysis in Table 3 but excluding interviews conducted after August 24, finding similar effects in magnitude and statistical significance (results available upon request). This implies that inflow of children during the summer does not pose any threat to our findings.

We also explored the effects of the noncontributory pension on living arrangements using an alternative data set and methods. We conducted a sharp regression discontinuity design (RDD) among individuals above and below 70 years old in Valladolid, specifically for older adults aged 70–79 and 60–69. Exploiting the age eligibility of the program, we estimated the local impact of the noncontributory pension for adults aged 70–79. We obtained the RDD estimates using data from the 2010 census. We used as our control group households with adults aged 60–69 but without adults aged 70 or older (i.e., older households not eligible for the benefit). Table A5 of the online appendix shows the results. Consistent with our previous findings, we found an increase in average household size but virtually no change for the proportion of persons living alone.

We designed the rollout schedule of the program and the timing of public information campaigns in close cooperation with the State government of Yucatan. The public information campaigns for the pension program started one month before the disbursement of the first pension payment and one month after W1 data collection was finished. Furthermore, the information about the program was disseminated only in Valladolid. We therefore surmise that bias effects resulting from announcement of the program are negligible. In addition, because Valladolid is 95 miles away from Motul, spillover bias effects on survey responses are unlikely. We also obtained information about differential shocks between W1 and W2 for treatment and control groups. Both towns, which are on the eastern side of the Yucatan peninsula, reported being affected by droughts (April and May 2009), suggesting similar aggregate effects.

## Discussion and Conclusion

This research examines the effects of a noncontributory pension program on changes in household living arrangements in Mexico. We found that the noncontributory pension program affected household size, particularly increasing the number of granddaughters and great-granddaughters aged 6–11 living in the household, and specifically for pension recipients aged 70–79, living with a spouse, in a household receiving two or more noncontributory pensions, and in the top income tercile.

It is worth exploring possible mechanisms underpinning these results. In their research on income transfers to elderly Black South African women, Edmonds et al. (2005) hypothesized that increased income may enable pensioners to house their young grandchildren while their daughters work away from home. They found that increased pension income was associated with a 7% increase in children aged 0–5 and a 10% decrease in prime working-age women aged 30–39 living in pension recipients’ homes. We did not find a change in the number of women in their 30s who moved out of pensioners’ households. It is possible that women in this age group do not move out of pensioners’ households but rather send their young daughters to live with pensioners, enabling these women to work more hours. This is consistent with previous research showing that Latin American grandmothers take on primary caregiving roles while their adult children work away from home (Da 2003). As Edmonds et al. (2005) also argued, this result may be unrelated to family preferences but rather is the result of changes in the labor market. The infusion of pension income into the local economy may ignite a demand for labor, which decreases the comparative advantage of caring for children among working-age adults. These adults may send their children to live with their parents as a result.

Contrary to previous studies, our research does not show that older adults use increased pension income to draw support from their families. Rather, our study suggests they use their increased income to provide support for their families. Hamoudi and Thomas (2014) found that pensioners in South Africa were more likely to live with men and women of lower educational attainment. They noted that although pensioners may use their extra income to help support these family members, less-educated men and women were more likely to reciprocate by providing older adults with personal care. In contrast, pensioners in our study were more likely to live with a dependent group—young girls—unlikely to provide personal care. This difference may reflect cultural differences, with older Mexicans who are able to do so providing care. Research on a perhaps more culturally similar group in Brazil did not find an effect of increased pension income on household composition (Kassouf and Rodrigues de Oliveira 2012). However, the authors of that study did not examine changes in the composition of children in the household but rather only different groups of adults. Although De Vos (2018) did find an increased probability of living in an extended family among low-income older women receiving a noncontributory pension, the author was not specific about the age composition within these households.

The gender-specific nature of our results is consistent with that in other studies. As in our study, Chen et al. (2017) found differential effects for male and female family members of older pensioners. Specifically, they found that increased pension income in China decreased shared living with sons but not daughters. Our finding of an increase in the number of granddaughters and great-granddaughters aged 6–11 living in the household housed by their grandparents may stem from pensioners providing care to their grandchildren most in need. Young girls are more likely than young boys to represent a financial burden for Mexican households; in Mexico, young girls are less likely to attend school (Parker and Pederzini 2000) and receive a lower share of resources when household heads return from a migration spell (Antman 2011). It is therefore reasonable to expect that pensioners would more readily house young girls because young girls are more likely in need of support.

Although the intergenerational dependence suggested in our study matches that found in other studies for China and South Africa (e.g., Chen et al. 2017; Edmonds et al. 2005), our results might not hold in developed countries. For example, studies of the United States and Canada have found that increased income from Social Security and other programs for older adults leads to less coresidence for pensioners and family members (Boyd 1991; Costa 1997, 1999; McGarry and Schoeni 2000; Orsini 2010). Thus, noncontributory programs in the United States and Canada would not necessarily lead to transfers from older adults to granddaughters. Nevertheless, older U.S. and Canadian immigrants are more likely to live with other family members because of economic necessity, familial values, and a desire to follow the cultural norms of their home countries—particularly for immigrants from Mexico, Latin America, and China (e.g., Angel et al. 1996; Diwan et al. 2011; Gonzales 2007; Gubernskaya and Tang 2017; Kaida and Boyd 2011). Therefore, we may expect results similar to our work for older adult immigrants in the U.S. and Canadian population.

The largest increase in the number of granddaughters and great-granddaughters is in households of adults aged 70–79, couples receiving two or more income supplements, and households in the highest income tercile. Consistent with the South African case (Edmonds et al. 2005), we did not find that increased income is associated with a higher probability of independent living. Rather, our results suggest that increased income enables grandparents with higher socioeconomic status to actualize their desire to help their more needy children, a finding that falls in line with altruistic and risk-sharing models. This interpretation falls in line with similar work done in Brazil, in which more than 80% of older adults who received a noncontributory pension reported sharing their increased pension income with household members (Barrientos et al. 2003). Our work highlights family behavioral changes as a mechanism through which other generations benefit from public policies directed at the elderly.

A limitation of our work is that six months is a short time frame in which to observe changes in living arrangements given the effort that moving may require. The effects of the noncontributory pension in our study may be limited to children because they can move more easily than adults can. Another limitation of the study is that we do not have information on the prior residence of granddaughters and great-granddaughters nor any detailed information on their parents’ household.

The Yucatan program may have several other implications. In South Africa, increased pension income led to improved anthropomorphic measures for young girls but not boys (Duflo 2003). Sustained pension income may lead to similar positive effects in Mexico. Increased pension income may also have economic benefits enabling, for example, pensioners’ working-age daughters (and granddaughters) to work away from home and helping their family guard against income shocks. Finally, the living arrangements that result from increased pension income may help reinforce the intergenerational ties that provide a protective effect in the face of hardship. In one U.S.-based study, children raised by their grandparents fared better on several measures than those raised by a single parent (Solomon and Marx 1995). This benefit, however, must also be weighed against the physical and emotional toll that grandparents experience in serving as surrogate parents (Hayslip and Kaminski 2005).

## Acknowledgments

We would like to thank Leandro Carvalho, Richard K. Green, Dowell Myers, and participants at 2016 Lusk Research Seminar at the USC Sol Price School of Public Policy, the 2017 DITE Winter meeting at Duke University, and the 2018 PAA annual meeting for their valuable comments. The expert assistance of Stephany Maqueda and Jorge Peniche is gratefully acknowledged.

## Authors’ Contributions

EA designed the intervention, conducted data collection for the study, framed the scope of the paper, conducted the statistical analysis, and was the primary text author. JP framed the scope of the paper, conducted literature review, participated in the statistical analysis, and helped write the manuscript. AV framed the scope of the paper, conducted literature review, and helped write and revise the manuscript. All authors reviewed and approved the final draft.

## Funding

The design and data collection of this research was supported by funding from the State of Yucatan and by Grants R01AG035008, P01AG022481, and R21AG033312 from the National Institute on Aging (NIA). The construction of the data set at the family level was supported by a grant from the USC Lusk Center for Real State affiliated with the USC Sol Price School of Public Policy and the USC Marshall School of Business.

## Data Availability

Data, surveys, and supporting material of the experiment conducted in the State of Yucatan, Mexico is available at https://cesr.usc.edu/yucatan_aging_data.

## Compliance With Ethical Standards

### Ethics and Consent

Informed consent was required from participants at each survey stage. The institutional review boards of both the RAND Corporation and the State of Yucatan approved the study procedures (protocol approval number 2008-0513-CR07).

### Conflict of Interest

The authors declare that they have no conflict of interest.

## Notes

1

The old-age dependency ratio is the ratio of the number of individuals at least 65 years of age per 100 individuals of working age (i.e., 15–64 years). It is a common indicator of the extent of challenges that a society may face in providing for its older population.

2

These programs, which are equivalent to the Supplemental Security Income (SSI) program in the United States, seek to decrease income insecurity in old age. In contrast, contributory pensions are equivalent to Social Security benefits in which the employee, employer, and government finance retirement benefits.

3

Workers who do not meet the eligibility criteria can withdraw the amount accumulated in the retirement account but cannot claim a minimum pension guarantee (Aguila et al. 2011).

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