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

Danzer, Alexander M. (September 2013): Benefit Generosity and the Income Effect on Labour Supply: Quasi-Experimental Evidence. In: The Economic Journal, Vol. 123, No. 571: pp. 1059-1084

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.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Junior Professor in Economics
• Subjects: 300 Social sciences > 330 Economics
• Language: English