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

Alexander Danzer ()

No 23, Proceedings of the German Development Economics Conference, Berlin 2011 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: This paper 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 labor supply among the elderly. In contrast to previous studies, the unusually simple pension eligibility rule allows estimating a pure causal income effect. Applying difference-indifferences and regression discontinuity methods on two nationally representative data sets yields a retirement elasticity of 0.3. Men and women respond at different margins of labor supply but with similar overall effect. Despite retirement incentives being disproportionally large for low income earners old-age poverty declined significantly.

Keywords: pure income effect; benefit generosity; labor supply; retirement; poverty; wage effect (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-age, nep-lab and nep-lma
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Related works:
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 Labour Supply: Quasi-Experimental Evidence (2013)
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