The author is grateful for valuable comments and suggestions by David Blackaby, Arnaud Chevalier, Natalia Danzer, Peter Dolton, Christina Gathmann, Lars Handrich, Timothy Hatton, Victor Lavy, Melanie Lührmann, Omer Moav, Robert Moffitt, Robert Poppe, Sarah Smith, Kenneth Troske, Jonathan Wadsworth, Joachim Winter, the editor Steve Pischke, two anonymous referees, as well as seminar and conference participants in Bristol, Essex, London, Mannheim, München, Perth, Regensburg and Shanghai. The ULMS data were kindly made available by the ESCIRRU consortium. Financial support from a Thomas Holloway Research Scholarship is gratefully acknowledged. All remaining errors are mine.
Benefit Generosity and the Income Effect on Labour Supply: Quasi-Experimental Evidence
Article first published online: 7 JAN 2013
© 2013 The Author(s). The Economic Journal © 2013 Royal Economic Society
The Economic Journal
Volume 123, Issue 571, pages 1059–1084, September 2013
How to Cite
Danzer, A. M. (2013), Benefit Generosity and the Income Effect on Labour Supply: Quasi-Experimental Evidence. The Economic Journal, 123: 1059–1084. doi: 10.1111/ecoj.12006
- Issue published online: 18 SEP 2013
- Article first published online: 7 JAN 2013
- Accepted manuscript online: 6 OCT 2012 12:00AM EST
- Manuscript Accepted: 27 AUG 2012
- Manuscript Received: 12 JUL 2011
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.