Applied Seminar

Miguel Ángel Borella

Universidad de Alicante

12-Jun-2013

Seminar 3 – 14:30

Abstract

We study the effect of a cash transfer to elderly individuals on their labour supply decisions by using data on households in Bolivia. We identify the effect thanks to a regression discontinuity design since a policy reform makes the eligibility for the transfer discontinuous at age 60. We find that the transfer decreases the probability of being employed by 5-10 percentage points although it is not statistically significant. In addition, the transfer decreases employment by 20-44 percentage points for females in urban areas and it is highly significant while it is not for the remaining subgroups of individuals by gender and residence in an urban area. The empirical evidence informs policy decisions about the labour market for elderly individuals by suggesting i) that the cash transfer program that the Bolivian government setup only marginally affects labour supply on average and ii) that policy design should account for heterogeneous responses by different subgroups of individuals.

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