PAM is a poverty targeted (or deprived-from-social-rights-targeted) program.

# 3.2 The Expansion of PAM

On December 1st, 2012 Enrique Peña Nieto took office as President of Mexico and that very same day he announced that he would aim to expand the social pension program and change its eligibility criteria from 70 years old and older to 65 years old and older. On February 26th, 2013, the Operating Rules of PAM reflected these changes. The coverage was expanded to the national level, by eliminating the village’s size in terms of inhabitants as a restriction, and it also expanded its eligibility age to include adults from 65 years of age and older who did not receive a contributory pension. Thus, the program became an intervention aiming to reduce the coverage gap of the contributory pension system.

The expansion of PAM was remarkably fast. At the beginning of 2013, according to SEDESOL registry of beneficiaries’ data there was virtually no one below 70 years old receiving PAM. Four months after the new operating rules were published in the Federal Official Gazette, there were already over half a million beneficiaries of ages under 70 and, before the end of 2013, there were already over one million beneficiaries between 65 and 69 years old. This rapid expansion was possible because the program was already operating in the 32 states of Mexico and serving 3 million beneficiaries. The expansion was still very fast, but possible because the program already had a major operational structure, institutional capacity, and the eligibility criteria at the time of the expansion was easy to verify, among others factors. According to ENIGH, by 2014, about 1 out of 3 people of 65 to 69 years of age were already PAM beneficiaries and about 1 out of 4 program beneficiaries were 65 to 69 years old.<sup>10</sup> In 2014, the number of program beneficiaries between 65 and 69 years of age had reached 1.5 million (SEDESOL, 2017), more than the whole population of each of the states of Baja California Sur, Colima, Campeche, Nayarit, Tlaxcala, and Aguascalientes, among others.

In order to identify the effects of the expansion of PAM on extreme poverty and labor supply, the testable hypotheses for our study are: HYPOTHESIS 1: _The expansion of PAM reduced extreme poverty for adults who became eligible after the expansion of the program, that is the group between 66 and 69 years of age._ HYPOTHESIS 2: _The expansion of PAM reduced the labor supply of adults who became eligible after the expansion of the program, that is the group between 66 and 69 years of age._

# 3.3 The Data

The data used in this study to analyze the effects of the expansion of PAM on poverty and labor supply come from the Socioeconomic Conditions Module of the Household Income and Expenditure National Survey (ENIGH-MCS). The ENIGH-MCS has national, state, and urban-rural level repre-

> 10The data from SEDESOL’s beneficiary registry differ moderately from the self-reported information of Mexico’s Household Income and Expenditure National Survey from the Instituto Nacional de Estadística y Geografía (INEGI). It is usually the case that people underreport their income and its sources in the National surveys. This is most likely where the difference between these two data sources is coming from. For instance, in ENIGH 2014 data there are 1.1 million self-reported PAM beneficiaries below 70 years old, while SEDESOL’s beneficiary registry reported for the same period 1.4 million beneficiaries.

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