IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Disability Grant and Individual Labour Force Participation: The Case of South Africa

  • George Mutasa

    ()

    (Development Policy Research Unit
    Researcher)

Registered author(s):

    Despite the explosive growth in the number of people receiving disability benefits in South Africa, very little is known about the labour supply effects of the disability grant (DG). This study investigates the impact of disability grant receipt on labour force participation. Consideration is given to potential bias that may arise from unobserved confounding factors. The study utilises data drawn from the 2007 wave of the General Household Survey (GHS) and implements a three-step methodology in a comparative perspective. Firstly, a standard probit regression of labour force participation is applied, followed by an instrumental variable regression to correct for possible endogeneity of DG take up. Finally, the sensitivity and robustness of the results is checked by implementing a variety of propensity score matching techniques. The results overall suggest that the DG receipt has substantial work disincentive effects, but the magnitude of the effect differs between parametric and non-parametric estimators.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.dpru.uct.ac.za/sites/default/files/image_tool/images/36/DPRU%20WP12-156.pdf
    File Function: First version, 2012
    Download Restriction: no

    Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 12156.

    as
    in new window

    Length: 33 pages
    Date of creation: Dec 2012
    Date of revision:
    Publication status: Published in Working Paper Series by the Development Policy Research Unit, December 2012, pages 1-33
    Handle: RePEc:ctw:wpaper:12156
    Contact details of provider: Postal: Private Bag X3, Rondebosch, 7701
    Phone: +27 21 650 5705
    Fax: +27 21 650 5711
    Web page: http://www.dpru.uct.ac.zaEmail:


    More information through EDIRC

    References listed on IDEAS
    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.:

    as in new window
    1. Anne Case, 2004. "Does Money Protect Health Status? Evidence from South African Pensions," NBER Chapters, in: Perspectives on the Economics of Aging, pages 287-312 National Bureau of Economic Research, Inc.
    2. Taryn Dinkelman, 2004. "How Household Context Affects Search Outcomes Of The Unemployed In Kwazulu-Natal, South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 72(3), pages 484-521, 09.
    3. Jones, Stephen R G, 1988. "The Relationship between Unemployment Spells and Reservation Wages as a Test of Search Theory," The Quarterly Journal of Economics, MIT Press, vol. 103(4), pages 741-65, November.
    4. Frikkie Booysen & Servaas Van Der Berg, 2005. "The Role Of Social Grants In Mitigating The Socio-Economic Impact Of Hiv/Aids In Two Free State Communities," South African Journal of Economics, Economic Society of South Africa, vol. 73(s1), pages 545-563, December.
    5. Janice Halpern & Jerry A. Hausman, 1985. "Choice Under Uncertainty: A Model of Applications for the Social Security Disability Insurance Program," NBER Working Papers 1690, National Bureau of Economic Research, Inc.
    6. 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.
    7. Bound, John, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 79(3), pages 482-503, June.
    8. Caliendo, Marco & Kopeinig, Sabine, 2005. "Some Practical Guidance for the Implementation of Propensity Score Matching," IZA Discussion Papers 1588, Institute for the Study of Labor (IZA).
    9. de Jong, Philip & Lindeboom, Maarten & van der Klaauw, Bas, 2006. "Screening Disability Insurance Applications," IZA Discussion Papers 1981, Institute for the Study of Labor (IZA).
    10. Gruber, Jonathan & Kubik, Jeffrey D., 1997. "Disability insurance rejection rates and the labor supply of older workers," Journal of Public Economics, Elsevier, vol. 64(1), pages 1-23, April.
    11. Jonathan Gruber, 2000. "Disability Insurance Benefits and Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1162-1183, December.
    12. 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.
    13. Martin Feldstein & James M. Poterba, 1984. "Unemployment Insurance and Reservation Wages," NBER Working Papers 1011, National Bureau of Economic Research, Inc.
    14. repec:dgr:uvatin:20060018 is not listed on IDEAS
    15. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
    16. Marianne Bertrand & Sendhil Mullainathan & Douglas Miller, 2003. "Public Policy and Extended Families: Evidence from Pensions in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 27-50, June.
    17. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
    18. Thomas DeLeire, 2000. "The Wage and Employment Effects of the Americans with Disabilities Act," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 693-715.
    19. David H. Autor & Mark G. Duggan, 2006. "The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 71-96, Summer.
    20. Anne Case & Cally Ardington, 2006. "The impact of parental death on school outcomes: Longitudinal evidence from South Africa," Demography, Springer, vol. 43(3), pages 401-420, August.
    21. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
    22. Michele Campolieti, 2004. "Disability Insurance Benefits and Labor Supply: Some Additional Evidence," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 863-890, October.
    23. repec:dgr:uvatin:2006018 is not listed on IDEAS
    24. Hugo Benitez-Silva & Moshe Buchinsky & John Rust, 2004. "How Large are the Classification Errors in the Social Security Disability Award Process?," NBER Working Papers 10219, National Bureau of Economic Research, Inc.
    25. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
    26. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 1-25, June.
    27. David H. Autor & Mark G. Duggan, 2003. "The Rise In The Disability Rolls And The Decline In Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 157-205, February.
    28. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
    29. Daniela Casale & Dorrit Posel, 2002. "The Continued Feminisation Of The Labour Force In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 70(1), pages 156-184, 03.
    30. Haveman, Robert H & Wolfe, Barbara L, 1984. "The Decline in Male Labor Force Participation: Comment," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 532-41, June.
    31. Haveman, Robert H. & Wolfe, Barbara L., 1984. "Disability transfers and early retirement: a casual relationship?," Journal of Public Economics, Elsevier, vol. 24(1), pages 47-66, June.
    32. Dehejia, Rajeev, 2005. "Practical propensity score matching: a reply to Smith and Todd," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 355-364.
    33. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, June.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ctw:wpaper:12156. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Waseema Petersen)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.