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Identfying Pure-Income Effects in an Empirical Model of Labour Supply: the case of the South African Social Pension

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  • Katheryn Eyal
  • Malcolm Kewsell

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    Abstract

    This paper investigates the income effects of the South African Social Pension. Using data from three waves of the the Labour Force Survey, we find that there appears to be a significant negative association between labour supply and pension receipt. However, we find little evidence to support the view that these results can be interpreted as pure income effects. Rather, the evidence suggests that the association is driven by age-cohort effects, which we argue reflects the burden of living with the elderly. We also report preliminary evidence which is suggestive of endogenous household formation in response to eligibility for the social pension.

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    File URL: http://www.saldru.uct.ac.za/home/index.php?/component/option,com_docman/Itemid,32/gid,380/task,doc_download/
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    Bibliographic Info

    Paper provided by Southern Africa Labour and Development Research Unit, University of Cape Town in its series SALDRU Working Papers with number 19.

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    Length: 27 pages
    Date of creation: Nov 2007
    Date of revision:
    Handle: RePEc:ldr:wpaper:19

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    Related research

    Keywords: public transfers; pensions; labour supply;

    References

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    1. Marianne Bertrand & Douglas Miller & Sendhil Mullainathan, 2000. "Public Policy and Extended Families: Evidence from South Africa," NBER Working Papers 7594, National Bureau of Economic Research, Inc.
    2. 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.
    3. 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.
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    Cited by:
    1. Leibbrandt, Murray & Lilenstein, Kezia & Shenker, Callie & Woolard, Ingrid, 2013. "The influence of social transfers on labour supply: A South African and international review," SALDRU Working Papers 112, Southern Africa Labour and Development Research Unit, University of Cape Town.

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