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

  • Katherine Eyal
  • Malcolm Kewsell

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    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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    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
    Contact details of provider: Postal: Leslie Social Science Building, Private Bag, Rondebosch, 7701
    Phone: +27 21 650 5696
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    Web page: http://www.saldru.uct.ac.za/
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    1. 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.
    2. Anne Case & Angus Deaton, 1996. "Large Cash Transfers to the Elderly in South Africa," NBER Working Papers 5572, National Bureau of Economic Research, Inc.
    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.
    4. Marianne Bertrand & Douglas Miller & Sendhil Mullainathan, 1999. "Public Policy and Extended Families: Evidence from South Africa," Working Papers 801, Princeton University, Department of Economics, Industrial Relations Section..
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