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Unintended Labor Supply Effects of Cash Transfer Programs: New Evidence from South Africa’s Pension

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  • Martin Abel

Abstract

Using South Africa’s first nationally representative panel data set, I find that the presence of pension recipients in the household reduces the probability of employment of both previously employed and unemployed prime-aged adults. Exploiting institutional features of the disability grant to isolate the pension’s income effect suggests that the effects operate through the income mechanism. By contrast, there is no evidence that pensioners enable household members to work by providing childcare as concluded by previous studies.

Suggested Citation

  • Martin Abel, 2019. "Unintended Labor Supply Effects of Cash Transfer Programs: New Evidence from South Africa’s Pension," Journal of African Economies, Centre for the Study of African Economies, vol. 28(5), pages 558-581.
    • Handle: RePEc:oup:jafrec:v:28:y:2019:i:5:p:558-581.
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    File URL: http://hdl.handle.net/10.1093/jae/ejz009
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    Cited by:

    1. Vidhya Unnikrishnan & Kunal Sen, 2020. "Old-age pensions and female labour supply in India," WIDER Working Paper Series wp-2020-90, World Institute for Development Economic Research (UNU-WIDER).
    2. Robert D. Osei & Monica Lambon‐Quayefio, 2021. "Cash transfers and the supply of labor by poor households: Evidence from the livelihood empowerment against poverty program in Ghana," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1293-1304, August.
    3. Timothy Köhler & Haroon Bhorat & Robert Hill, 2023. "The effect of wage subsidies on job retention in a developing country: Evidence from South Africa," WIDER Working Paper Series wp-2023-114, World Institute for Development Economic Research (UNU-WIDER).
    4. Ihsaan BASSIER & Joshua BUDLENDER, 2024. "Methods for Credible Evaluation of Programme Stimulus Effects in South Africa," Working Paper 53315978-8164-44f9-8141-5, Agence française de développement.
    5. Manea, Roxana Elena & Piraino, Patrizio & Viarengo, Martina, 2023. "Crime, inequality and subsidized housing: Evidence from South Africa," World Development, Elsevier, vol. 168(C).
    6. Nguyen, Cuong Viet & Tarp, Finn, 2023. "Cash Transfers and Labor Supply: New Evidence on Impacts and Mechanisms," GLO Discussion Paper Series 1243, Global Labor Organization (GLO).
    7. Ihsaan Bassier & Joshua Budlender, 2024. "Stimulus effects of a large public employment programme," Working Paper a09be470-a23f-4594-b51a-f, Agence française de développement.
    8. Guimbeau, Amanda & Menon, Nidhiya, 2024. "Pensions and Depression: Gender-Disaggregated Evidence from the Elderly Poor in India," IZA Discussion Papers 17530, Institute of Labor Economics (IZA).
    9. Bassier, Ihsaan & Budlender, Joshua & Zizzamia, Rocco & Leibbrandt, Murray & Ranchhod, Vimal, 2021. "Locked down and locked out: Repurposing social assistance as emergency relief to informal workers," World Development, Elsevier, vol. 139(C).
    10. Awaworyi Churchill, Sefa & Iqbal, Nasir & Nawaz, Saima & Yew, Siew Ling, 2021. "Unconditional cash transfers, child labour and education: theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 437-457.
    11. Haroon Bhorat & Timothy Köhler & David de Villiers, 2023. "Can Cash Transfers to the Unemployed Support Economic Activity? Evidence from South Africa," Working Papers 202301, University of Cape Town, Development Policy Research Unit.
    12. Unnikrishnan, Vidhya & Imai, Katsushi S., 2020. "Does the old-age pension scheme improve household welfare? Evidence from India," World Development, Elsevier, vol. 134(C).
    13. Kacker, Kanishka, 2019. "Social transfers and labor supply: Long run rvidence from South Africa," MPRA Paper 99044, University Library of Munich, Germany.
    14. Zizzamia, Rocco, 2020. "Is employment a panacea for poverty? A mixed-methods investigation of employment decisions in South Africa," World Development, Elsevier, vol. 130(C).

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