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

  • Danzer, Alexander M.

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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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 20031.

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Date of creation: Sep 2013
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Publication status: Published in The Economic Journal 571 123(2013-09): pp. 1059-1084
Handle: RePEc:lmu:muenar:20031
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