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Benefit Generosity and the Income Effect on Labour Supply: Quasi‐Experimental Evidence

  • Alexander M. Danzer

This study uses an unanticipated, exogenous doubling of the legal minimum pension in Ukraine as a unique quasi-experiment to evaluate the income effect on various aspects of labour supply among the elderly. In contrast to previous studies, the unusually simple pension eligibility rule allows estimating a pure causal income effect. Applying reduced form difference-in-differences and regression discontinuity as well as instrumental variable methods on two nationally representative data sets yields a retirement semi-elasticity of 0.1-0.2. Men and women respond at different margins of labour supply but with similar overall effect.

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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 123 (2013)
Issue (Month): (09)
Pages: 1059-1084

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Handle: RePEc:ecj:econjl:v:123:y:2013:i::p:1059-1084
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