Old-Age Pensions and Female Labour Supply in India
By Vidhya of Unnikrishnan & Kunal Sen
Whether cash transfers have unintended behavioural effects on the recipient household’s labour supply is of considerable policy interest. We examine the impact’ of the Indira Gandhi National Old-Age Pension Scheme (IGNOAPS) on prime-age women’s labour supply decisions in India, where female labour force participation continues to decline over time. We use propensity score matching (PSM) to make households with IGNOAPS recipients comparable with program non-recipients. Further, we use individual fixed effects (FE) to eliminate the effect of other time invariant unobservable characteristics on women’s labour market behaviour. Our results from the PSM-FE suggest that having a pensioner in the household increases the probability of working in paid employment by 3.87 percentage points for women aged20–50. We suggest that this positive effect results from the income effect of the scheme, leading to reduced labour supply by the pensioner, allowing them to provide greater childcare support.
Source: SSRN
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