SEMINAR 24 October 2011: Alexander Danzer, Ludwig-Maximillan-University, Munich

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

Abstract.

This paper 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 elasticity of 0.1. Men and women respond at different margins of labour supply but with similar overall effect