Working Paper: NBER ID: w10306
Authors: Eric Edmonds; Kristin Mammen; Douglas L. Miller
Abstract: Despite the importance of living arrangements for well-being and production, the effect of changes in household income on living arrangements is not well understood. This study overcomes the identification problems that have limited the study of the link between income and living arrangements by exploiting a discontinuity in the benefit formula for the social pension in South Africa. In contrast to the findings of the existing literature from wealthier populations, we find no evidence that pension income is used to maintain the independence of black elders in South Africa. Rather, potential beneficiaries alter their household structure. Prime working age women depart, and we observe an increase in children under 5 and young women of child-bearing age. These shifts in co-residence patterns are consistent with a setting where prime age women have comparative advantage in work away from extended family relative to younger women. The additional income from old age support may induce a change in living arrangements to exploit this advantage.
Keywords: Pension Income; Living Arrangements; South Africa; Elderly; Household Composition
JEL Codes: J12; H55; I38; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pension eligibility (H55) | living arrangements (R21) |
| pension income (H55) | household composition (D10) |
| pension income (H55) | number of children aged 0-5 in households (J13) |
| pension income (H55) | number of young women aged 18-23 in households (J12) |
| pension income (H55) | decrease in presence of prime working-age women (30-39 years old) (J21) |