The Mental Cost of Pension Loss: The Experience of Russia's Pensioners during Transition

Penka Kovacheva and Xiaotong Niu

A chapter in Research in Labor Economics, 2012, pp 191-240 from Emerald Group Publishing Limited

Abstract: In this article we investigate the impact of the 1996 pension crisis in Russia on several measures of subjective well-being (SWB). Using a difference-in-difference strategy and an individual fixed-effects model, we find that an exogenous shock to the redistribution system has a significant negative effect on the SWB of pensioners who fail to receive their pensions. The effect differs across aspects of life evaluation; the shock has a significant negative effect on current life satisfaction (LS), whereas it has no effect on self-assessed health. The effect of the shock extends to non-pensioners who live with pensioners in arrears: they experience an equally strong and significant decline in LS even after accounting for personal income. In addition, we find that the pension crisis leads pensioner households to neither receive more nor send less money to extended family, thus leaving these households to bear alone the entire monetary cost. Lastly, we find suggestive evidence that the crisis, despite being a purely monetary shock, affects well-being in ways that go beyond the monetary size of pension loss. Policies aimed to fully compensate for such disruptions in the redistribution system would need to take these externalities into account.

Keywords: Subjective well-being; pension crisis; income shocks; transition economies (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
https://www.emerald.com/insight/content/doi/10.110 ... 9121(2012)0000036010
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:rleczz:s0147-9121(2012)0000036010

DOI: 10.1108/S0147-9121(2012)0000036010

Access Statistics for this chapter

More chapters in Research in Labor Economics from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().