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Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa

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Author Info
Cally Ardington
Anne Case
Victoria Hosegood

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Abstract

We quantify the labor supply responses of prime-aged adults to the presence of pensioners in their households, using longitudinal data collected in South Africa. We compare households and individuals before and after pension receipt and pension loss, which allows us to control for a host of unobservable household and individual characteristics that may determine labor market behavior. We find large cash transfers to the elderly lead to increased employment among prime-aged adults, which occurs primarily through labor migration. The pension's impact is attributable to the increase in household resources it represents, which can be used to stake migrants until they become self-sufficient, and to the presence of pensioners who can care for small children, which allows prime-aged adults to look for work elsewhere. (JEL H23, H55, I38, J22, O15)

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Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 1 (2009)
Issue (Month): 1 (January)
Pages: 22-48
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Handle: RePEc:aea:aejapp:v:1:y:2009:i:1:p:22-48

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March. [Downloadable!] (restricted)
  2. Klasen, Stephan & Woolard, Ingrid, 2000. "Surviving Unemployment without State Support: Unemployment and Household Formation in South Africa," IZA Discussion Papers 237, Institute for the Study of Labor (IZA). [Downloadable!]
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  3. Case, Anne & Deaton, Angus, 1998. "Large Cash Transfers to the Elderly in South Africa," Economic Journal, Royal Economic Society, vol. 108(450), pages 1330-61, September. [Downloadable!] (restricted)
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  4. Eric Edmonds & Kristin Mammen & Douglas L. Miller, 2004. "Rearranging the Family? Income Support and Elderly Living Arrangements in a Low Income Country," NBER Working Papers 10306, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Marianne Bertrand & Sendhil Mullainathan & Douglas Miller, 2003. "Public Policy and Extended Families: Evidence from Pensions in South Africa," World Bank Economic Review, Oxford University Press, vol. 17(1), pages 27-50, June.
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  6. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December. [Downloadable!] (restricted)
  7. Posel, Dorrit & Fairburn, James A. & Lund, Frances, 2006. "Labour migration and households: A reconsideration of the effects of the social pension on labour supply in South Africa," Economic Modelling, Elsevier, vol. 23(5), pages 836-853, September. [Downloadable!] (restricted)
  8. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," World Bank Economic Review, Oxford University Press, vol. 17(1), pages 1-25, June.
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Cited by:
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  1. Irineu E. Carvalho Filho, 2008. "Household Income As A Determinant of Child Labor and School Enrollment in Brazil: Evidence From A Social Security Reform," IMF Working Papers 08/241, International Monetary Fund. [Downloadable!]
  2. Dora L. Costa, 2008. "The Rise of Retirement Among African Americans: Wealth and Social Security Effects," NBER Working Papers 14462, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Paula Armstrong & Bongisa Lekezwa & Krige Siebrits, 2008. "Poverty in South Africa: A profile based on recent household surveys," Working Papers 04/2008, Stellenbosch University, Department of Economics. [Downloadable!]
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