Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa

Cally Ardington, Anne Case () and Victoria Hosegood

No 13442, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The South African old-age social pension has been much studied by both researchers and policy makers, in part for the larger lessons that might be learned about behavioral responses to cash transfers in developing countries. In this paper, we quantify the labor supply responses of prime-aged individuals to changes in the presence of old-age pensioners in their households, using longitudinal data recently collected in northern KwaZulu-Natal. Our ability to compare households and individuals before and after pension receipt, and pension loss, allows us to control for a host of unobservable household and individual characteristics that may determine labor market behavior. We find that large cash transfers to elderly South Africans lead to increased employment among prime-aged members of their households. Perhaps more importantly, pension receipt influences where this employment takes place. We find large, significant effects on labor migration among prime-aged members upon pension arrival. The pension's impact is attributable both 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-codes: H31 J20 O12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr and nep-dev
Date: 2007-09
Note: AG CH PE LS
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Related works:
Working Paper: LABOR SUPPLY RESPONSES TO LARGE SOCIAL TRANSFERS: LONGITUDINAL EVIDENCE FROM SOUTH AFRICA (2007)
Working Paper: Labor supply responses to large social transfers: Longitudinal evidence from South Africa (2008)
Working Paper: LABOR SUPPLY RESPONSES TO LARGE SOCIAL TRANSFERS: LONGITUDINAL EVIDENCE FROM SOUTH AFRICA (2007)
Journal Article: Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa (2009)
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