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

Alexander Danzer ()

Munich Reprints in Economics from University of Munich, Department of Economics

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.

Date: 2013-09
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Published in The Economic Journal 571 123(2013-09): pp. 1059-1084

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Journal Article: Benefit Generosity and the Income Effect on Labour Supply: Quasi‐Experimental Evidence (2013) Downloads
Working Paper: Benefit Generosity and the Income Effect on Labor Supply: Quasi-Experimental Evidence (2011) Downloads
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