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Luigi Pistaferri, Consumption Inequality and Family Labor Supply

Bargaining with Grandma: The Impact of the South African Pension on Household Decision Making

Archived Abstract of Former PSC Researcher

Download PDF versionAmbler, Catherine. 2011. "Bargaining with Grandma: The Impact of the South African Pension on Household Decision Making." PSC Research Report No. 11-741. June 2011.

I use the 2008 South African National Income Dynamics Survey to examine how the increase in income provided by the South African pension affects decision-making in the household. Exploiting the age discontinuity in pension eligibility, I find that eligible females are 12 to 16 percentage points more likely to be the primary decision-makers for expenditures – rare direct support for bargaining models of the household. There is no effect for men. This increase in decision-making power provides a channel through which the pension results in positive impacts for households. As in Duflo (2003), female eligibility leads to improved nutritional outcomes for girls and additionally, higher levels of durable goods ownership. An analysis of income data shows that due to labor force withdrawal, male income does not increase with eligibility, indicating that despite previous evidence, elderly women in South Africa do not necessarily direct income towards more productive uses than men.

Country of focus: South Africa.

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