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Public Policy and Extended Families: Evidence from South Africa

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Author Info
Marianne Bertrand
Douglas Miller
Sendhil Mullainathan

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Abstract

Tightly knit extended families, in which people often give money to and get money from relatives, characterize many developing countries. These intra-family flows mean that public policies may affect a very different group of people than the one they target. To assess the empirical importance of these effects, we study a cash pension program in South Africa that targets the elderly. Focusing on three-generation households , we use the variation in pension receipt that comes from differences in the age of the elder(s) in the households. We find a sharp drop in the labor force participation of prime-age men in these households when elder women reach 60 years old or elder mean reach 65, the respective ages for pension eligibility. We also find that the drop in labor supply diminishes with family size, as the pension money is split over more people, and with educational attainment, as the pension money becomes less significant relative to outside earnings. Other findings suggest that power within the family might play an important role: (1) labor supply drops less when the pension is received by a man rather than by a woman; (2) middle aged men (those more likely to have control in the family) reduce labor supply more than younger men; and (3) female labor supply is unaffected. These last two findings also respectively suggest that the results are unlikely to be driven by increased human capital investment or by a need to stay home to care for the elderly. As a whole, this public policy seems to have had large effects on a group-prime age men living with the old-quite different from the one it originally targeted-elderly men and women.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7594.

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Date of creation: Mar 2000
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Handle: RePEc:nbr:nberwo:7594

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D1 - Microeconomics - - Household Behavior
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment

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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. Dean Yang, 2004. "International Migration, Human Capital, and Entrepreneurship: Evidence from Philippine Migrants’ Exchange Rate Shocks," Working Papers 531, Research Seminar in International Economics, University of Michigan. [Downloadable!]
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  3. Dani Rodrik, 2006. "Understanding South Africa's Economic Puzzles," Working Papers id:641, esocialsciences.com. [Downloadable!]
    Other versions:
  4. Cally Ardington & Anne Case & Victoria Hosegood, 2007. "Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa," NBER Working Papers 13442, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. 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)
    Other versions:
  6. Schüler, Dana, 2007. "Incentive Effects of Transfers within the Extended Family: The Case of Indonesia," Proceedings of the German Development Economics Conference, Göttingen 2007 29, Verein für Socialpolitik, Research Committee Development Economics. [Downloadable!]
  7. Farah Pirouz, 2005. "Have Labour Market Outcomes Affected Household Structure in South Africa? A Descriptive Analysis of Households," Working Papers 9621, University of Cape Town, Development Policy Research Unit. [Downloadable!]
  8. Katy Cornwell & Brett Inder & Pushkar Maitra & Anu Rammohan, 2005. "Household Composition and Schooling of Rural South African Children: Sibling Synergy and Migrant Effects," Monash Economics Working Papers 22/05, Monash University, Department of Economics. [Downloadable!]
  9. Marie W. Arneberg, John K. Dagsvik and Zhiyang Jia, 2002. "Labor Market Modeling Recognizing Latent Job Attributes and Opportunity Constraints An Empirical Analysis of Labor Market Behavior of Eritrean Women," Discussion Papers 331, Research Department of Statistics Norway. [Downloadable!]
  10. Rodrick, Dani, 2006. "Understanding South Africa's Economic Puzzles," Working Paper Series rwp06-039, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  11. Pushkar Maitra & Ranjan Ray, 2006. "Household expenditure patterns and resource pooling: evidence of changes in post-apartheid South Africa," Review of Economics of the Household, Springer, vol. 4(4), pages 325-347, December. [Downloadable!] (restricted)
  12. François Bourguignon & Martin Browning & Pierre-André Chiappori, 2006. "Efficient Intra-household Allocations and Distribution Factors: Implications and Identification," CAM Working Papers 2006-02, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics. [Downloadable!]
    Other versions:
  13. Alex Sienaert, 2007. "Migration, Remittances and Public Transfers: Evidence from South Africa," Economics Series Working Papers 351, University of Oxford, Department of Economics. [Downloadable!]
  14. Timothy Hinks, 2008. "Poverty, networks and location: the determinants of job-search in South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(2), pages 117-131. [Downloadable!]
  15. Farshid Vahid & Pushkar Maitra, 2005. "The Effect of Household Characteristics on Living Standards in South Africa 1993 - 98: A Quantile Regression Analysis with Sample Attrition," ANUCBE School of Economics Working Papers 2005-452, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
    Other versions:
  16. Laura Juarez, 2007. "The Effect of an Old-Age Demogrant on the Labor Supply and Time Use of the Elderly and Non-Elderly in Mexico," Working Papers 0706, Centro de Investigacion Economica, ITAM. [Downloadable!]
  17. Dennis Görlich & Toman Omar Mahmoud & Christoph Trebesch, 2007. "Explaining Labour Market Inactivity in Migrant-Sending Families: Housework, Hammock, or Higher Education," Kiel Working Papers 1391, Kiel Institute for the World Economy. [Downloadable!]
  18. Kazuyasu Sakamoto, 2007. "Familial Support for Unemployed Youth," Hi-Stat Discussion Paper Series d06-201, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  19. Pierre-André Chiappori & Bernard Fortin & Guy Lacroix, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," CIRANO Working Papers 2001s-16, CIRANO. [Downloadable!]
    Other versions:
  20. Manacorda, Marco & Moretti, Enrico, 2005. "Why Do Most Italian Young Men Live With Their Parents? Intergenerational Transfers and Household Structure," CEPR Discussion Papers 5116, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  21. Pushkar Maitra & Ranjan Ray, 2003. "Resource inflows and household composition: evidence from South African panel data," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(8), pages 1037-1047. [Downloadable!]
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