Social Transfer Benefits and Retirement Decisions: Evidence from South Africa

Social Transfer Benefits and Retirement Decisions: Evidence from South Africa

Author: 
Muchiri, Steve  
Place: 
New York
Publisher: 
John Wiley & Sons Publishing Company
Date published: 
2018
Record type: 
Responsibility: 
Garen, John, jt. author
Journal Title: 
South African Journal of Economics
Source: 
South African Journal of Economics, Vol. 86, No. 1, March 2018, pp. 23-52
Abstract: 

Population aging poses a new challenge to the fiscal sustainability of social security programs around the globe. As life expectancy increases, among other reasons, many governments in developed countries have begun to reform key features of their programs, such as increasing the eligibility age for access to social benefits. However, as in the case of South Africa, some opt to decrease the eligibility age for access to such pension benefits. The South African old age pension, which is one of the most expansive cash transfers in developing countries, puts a significant monthly cash transfer in the hands of its recipients. This cash transfer is conditioned on age and a means test that is very generous to most South Africans. In this paper, we seek to understand the impact of such an increase in non?labour income on the labour force participation of older men by exploiting a phased?in reduction in pension eligibility age. We estimate that, at the median predicted market wage, pension age?eligibility reduces the probability of labour force participation by approximately 9.85% points for single males and 15.45% points for married males.

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Date created: 
Thursday, December 6, 2018