Danzer, Alexander M. (2013). Benefit generosity and the income effect on labour supply: quasi‐experimental evidence. The Economic Journal, 123(571)
This study 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 semi-elasticity of 0.1–0.2. Men and women respond at different margins of labour supply but with similar overall effect.
The Economic Journal
Danzer, Alexander M.