We quantify the labor supply responses of prime-aged adults to the
presence of pensioners in their households, using longitudinal data
collected in South Africa. We compare households and individuals
before and after pension receipt and pension loss, which allows us
to control for a host of unobservable household and individual characteristics
that may determine labor market behavior. We find large
cash transfers to the elderly lead to increased employment among
prime-aged adults, which occurs primarily through labor migration.
The pension's impact is attributable to the increase in household
resources it represents, which can be used to stake migrants until
they become self-sufficient, and to the presence of pensioners who
can care for small children, which allows prime-aged adults to look
for work elsewhere. (JEL H23, H55, I38, J22, O15)
Ardington, Cally, Anne Case, and Victoria Hosegood.
"Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa."
American Economic Journal: Applied Economics,
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Social Security and Public Pensions
Welfare and Poverty: Government Programs; Provision and Effects of Welfare Programs
Time Allocation and Labor Supply
Economic Development: Human Resources; Human Development; Income Distribution; Migration