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

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  • Danzer, Alexander M.

Abstract

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.

Suggested Citation

  • Danzer, Alexander M., 2013. "Benefit Generosity and the Income Effect on Labour Supply: Quasi-Experimental Evidence," Munich Reprints in Economics 20031, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:20031
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    Cited by:

    1. Hartmut Lehmann & Alexander Muravyev & Klaus Zimmermann, 2012. "The Ukrainian longitudinal monitoring survey: towards a better understanding of labor markets in transition," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-15, December.
    2. Puhani, Patrick A. & Tabbert, Falko, 2015. "Effects of Changes in Pensions on the Age of First Benefit Receipt: Regression Discontinuity Evidence from Repatriated Ethnic Germans," IZA Discussion Papers 8787, Institute for the Study of Labor (IZA).
    3. Atalay, Kadir & Barrett, Garry F., 2016. "Pension Incentives and the Retirement Decisions of Couples," IZA Discussion Papers 10013, Institute for the Study of Labor (IZA).
    4. Paweł Strzelecki & Joanna Tyrowicz, 2015. "Crowding (out) the retirees? RDD application to raising effective retirement age in Poland," Working Papers 2015-10, Faculty of Economic Sciences, University of Warsaw.
    5. Alexander M. Danzer, 2015. "Skill biased labour demand and the wage growth of younger workers: Evidence from an unexpected pension reform," IBS Working Papers 2/2015, Instytut Badan Strukturalnych.
    6. Kupets, Olga, 2016. "Education-job mismatch in Ukraine: Too many people with tertiary education or too many jobs for low-skilled?," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 125-147.
    7. Danzer, Alexander M. & Danzer, Natalia, 2016. "Pension generosity and mental wellbeing: The effect of eradicating poverty at old-age," Annual Conference 2016 (Augsburg): Demographic Change 145910, Verein für Socialpolitik / German Economic Association.
    8. Danzer, Alexander M. & Danzer, Natalia, 2016. "The long-run consequences of Chernobyl: Evidence on subjective well-being, mental health and welfare," Journal of Public Economics, Elsevier, vol. 135(C), pages 47-60.
    9. Puhani, Patrick A. & Tabbert, Falko, 2016. "The effects of pension changes on age of first benefit receipt: Regression discontinuity evidence from repatriated ethnic Germans," Labour Economics, Elsevier, vol. 38(C), pages 12-23.
    10. Inés Berniell & Dolores de la Mata & Matilde P. Machado, 2013. "The impact of a permanent Income shock on the situation of women in the household: the case of a pension reform in Argentina," DOCUMENTOS DE TRABAJO 011037, UNIVERSIDAD DEL ROSARIO.

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