Abstract
Longer life expectancy and insufficient savings expose individuals to financial vulnerability in older ages and prompt government support measures. We study a government cash subsidy program for the low-income elderly population in Singapore. Using comprehensive, high-frequency transaction data, we estimate a marginal propensity to consume (MPC) out of the subsidies of 0.7. More liquidity-constrained recipients exhibit a higher MPC of 1. They also increase their spending immediately after recurring subsidies. We find no evidence of labor supply reduction or other strategic behaviors. We discuss implications for eligibility criteria, payment frequency, and distribution form in policy design.
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