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Endogenous Co-residence and Program Incidence: South Africa’s Old Age Pension

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  • Amar Hamoudi
  • Duncan Thomas

Abstract

We investigate whether living arrangements respond to an arguably exogenous shift in the distribution of power in family economic decision-making. In the early 1990s, the South African Old Age Pension was expanded to cover most black South Africans above a sex-specific age cut-off resulting in a substantial increase in the income of older South Africans and potentially their say in the economic decisions of their families. Beneficiaries of the program are more likely to coreside with adults who have less human capital as measured by height and education. Since height and education are fixed for adults, this cannot be an effect of the pension income but reflects selective changes in living arrangements resulting from the pension. The findings highlight the endogeneity of living arrangements and illustrate the potential value of moving beyond theory and data that are confined to a spatially determined definition of the household.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19929.

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Date of creation: Feb 2014
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Handle: RePEc:nbr:nberwo:19929

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  1. Anderson, Michael L., 2008. "Multiple Inference and Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects," Journal of the American Statistical Association, American Statistical Association, vol. 103(484), pages 1481-1495.
  2. Case, A. & Deaton, A., 1996. "Large Cash Transfers to the Elderly in South Africa," Papers 176, Princeton, Woodrow Wilson School - Development Studies.
  3. Frederick J. Zimmerman, 2003. "Cinderella Goes to School: The Effects of Child Fostering on School Enrollment in South Africa," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
  4. Anne Case & Christina Paxson, 2006. "Stature and Status: Height, Ability, and Labor Market Outcomes," NBER Working Papers 12466, National Bureau of Economic Research, Inc.
  5. Victoria Hosegood & Anne Case & Cally Ardington, 2009. "Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 22-48, January.
  6. Andrew Kerr & Francis Teal, 2012. "The Determinants of Earnings Inequalities: Panel data evidence from South Africa," CSAE Working Paper Series 2012-04, Centre for the Study of African Economies, University of Oxford.
  7. Edmonds, Eric V., 2006. "Child labor and schooling responses to anticipated income in South Africa," Journal of Development Economics, Elsevier, vol. 81(2), pages 386-414, December.
  8. Thomas, D. & Strauss, J., 1997. "Health and Wages: Evidence on Men and Women in Urban Brazil," Papers 97-05, RAND - Reprint Series.
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Cited by:
  1. Levinsohn, James & Pugatch, Todd, 2014. "Prospective analysis of a wage subsidy for Cape Town youth," Journal of Development Economics, Elsevier, vol. 108(C), pages 169-183.

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