The Old Age Pension (OAP) program for elderly South Africans puts a significant
cash transfer in the hands of many poor households. This dissertation investigates
its impact on labor force participation and consumption of selected household items.
In the first half of the dissertation, we take advantage of a policy reform that lowered
men’s OAP eligibility age from 65 to 60 for men to match that of women for estimation
identification. Using the General Household Survey data, we first demonstrate
that both men and women respond to the eligibility age by dropping from labor force
participation at the eligibility age, as expected. Using a difference-in-difference-indifference
estimator, we estimate that at the median predicted wage, age eligibility
reduces men’s probability of labor force participation by approximately 6.14 percentage
points.
Previous studies show that not only is the OAP take-up rate high among the ageeligible,
but its value is sufficiently high to generally make it a significant component
of total household income for the majority of pensioners and their households. Other
studies add that it is a dominant source of income in older households, such that
it is often the sole source of income in these households, especially those in rural
areas. In the second half of the dissertation, therefore, we examine the impact of ageeligibility
status on a number of selected household outcomes, such as food security,
sanitation, source of drinking water, and ownership of consumer durable goods. We
also examine the extent to which gender influences its impact on household outcomes.
We find positive effects on a select number of outcomes; however, we note this is more
associated with females’ age-eligibility status, but not that of males.