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Research ArticleArticles
Open Access

Bargaining with Grandma: The Impact of the South African Pension on Household Decision-Making

Kate Ambler
Journal of Human Resources, October 2016, 51 (4) 900-932; DOI: https://doi.org/10.3368/jhr.51.4.0314-6265R1
Kate Ambler
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  • Figure 1
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    Figure 1

    Pension Receipt by Age

    Notes: Sample is individuals aged 50 to 75, women in Panel A and men in Panel B. Scatterplots are unweighted means of Y-axis variable by age in years. Unweighted OLS regression lines of Y-axis variable on age are estimated on either side of the discontinuity (age 60 for women and age 65 for men). Ninety-five percent confidence intervals are shown around the regression lines. Y-axis variable is a dummy variable for pension receipt.

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    Figure 2

    Primary Decision-making for Day to Day Purchases by Age

    Notes: Sample is individuals aged 50 to 75, women in Panel A and men in Panel B. Scatterplots are unweighted means of Y-axis variable by age in years. Unweighted OLS regression lines of Y-axis variable on age are estimated on either side of the discontinuity (age 60 for women and age 65 for men). Ninety-five percent confidence intervals are shown around the regression lines. Y-axis variable is a dummy variable for whether or not everyone in household agrees that individual is the primary decision-maker for day-to-day purchases.

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    Figure 3

    Decision-making by Percent of Personal Income Share

    Notes: Sample is individuals aged 50 to 75, women in Panel A and men in Panel B. The top half percent of male and female household income is trimmed. Scatterplots are the mean of whether or not everyone in the household agrees the individual is the primary decision-maker for day-to-day purchases by five percentage point bins of personal income share.

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    Figure 4

    Personal Income Share by Age

    Notes: Sample is individuals aged 50 to 75, women in Panel A and men in Panel B. The top half percent of male and female household income is trimmed. Scatterplots are unweighted means of Y-axis variable by age. Unweighted OLS regression lines of Y-axis variable on age are estimated on either side of the discontinuity (age 60 for women and age 65 for men). Ninety-five percent confidence intervals are shown around the regression lines. Y-axis variable is the percent of total household income reported to be received by the individual.

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    Figure 5

    Individual Labor Income as Percent of Household Nonpension Income by Age

    Notes: Sample is individuals aged 50 to 75, women in Panel A and men in Panel B. The top half percent of male and female household income is trimmed. Scatterplots are unweighted means of Y-axis variable by age. Unweighted OLS regression lines of Y-axis variable on age are estimated on either side of the discontinuity (age 60 for women and age 65 for men). Ninety-five percent confidence intervals are shown around the regression lines. Y-axis variable is individual labor income as a percent of household nonpension income.

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    Figure 6

    Pension Receipt by Age in 1993: Households with Young Children

    Notes: Scatterplots are unweighted means of Y-axis variable by age in years. Unweighted OLS regression lines of Y-axis variable on age are estimated on either side of the discontinuity (age 60 for women and age 65 for men). Ninety-five percent confidence intervals are shown around the regression lines. Source is 1993 PSLSD data set. Sample is individuals aged 50 to 75 living with a child 6 to 60 months. Y-axis variable is pension receipt.

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    Figure 7

    Personal Income Share by Age in 1993: Households with Young Children

    Notes: Scatterplots are unweighted means of Y-axis variable by age in years. Unweighted OLS regression lines of Y-axis variable on age are estimated on either side of the discontinuity (age 60 for women and age 65 for men). Ninety-five percent confidence intervals are shown around the regression lines. Source is 1993 PSLSD data set. Sample is individuals aged 50 to 75 living with a child 6 to 60 months. Y-axis variable is the percent of total household income reported to be earned or received by the individual.

Tables

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    Table 1

    Summary Statistics for Adults Aged 50 to 75

    WomenMen
    Not eligibleEligibleNot eligibleEligible
    Demographics
    Age (mean)54.3 (2.8)66.8 (4.5)55.9 (4.2)69.2 (3.0)
    Household size (mean)5.1 (3.0)5.1 (3.0)4.6 (3.0)5.3 (3.2)
    Years of schooling (mean)4.3 (4.0)2.8 (3.5)4.9 (4.1)2.8 (3.4)
    Rural (percent)63.471.755.775.3
    Married (percent)46.732.773.878.8
    Presence of child under fifteen (percent)71.973.860.169.2
    Presence of child under five (percent)42.740.932.043.0
    Presence of man (woman) 50+
    (percent)
    35.628.342.470.2
    Presence of woman 18–49 (percent)51.653.956.358.4
    Presence of man 18–49 (percent)45.145.135.240.9
    Income and employment
    Employed (percent)42.916.354.121.0
    Per-capita hh income (median)428482514570
    Personal income (median)635940870870
    Personal income as percent of total hh income (median)31.547.936.039.8
    Pension receipt
    Received pension (percent)9.290.88.285.0
    Amount received (median, conditional on receipt)885870920870
    Is primary decision maker for
    Day-to-day purchases (percent)60.867.755.962.0
    Large, unusual purchases (percent)57.964.964.166.5
    Who can live in household (percent)55.764.668.471.7
    Where household lives (percent)55.464.369.571.0
    All four categories (percent)53.161.653.558.8
    Observations932862830279
    • Notes: Author’s calculations from 2008 NIDS. Standard deviations for means are in parentheses. Number of observations is based on black individuals aged 50–75 with nonmissing values for decision-making on day-to-day purchases, which is the main regression sample. All money amounts are in South African rand, the exchange rate varied from 7 to 8 rand to the U.S dollar over the survey period. Employment is defined as working in any capacity including casual labor, self employment, and own farm labor. Personal income is any income that can be attributed directly to the individual. Decision-making variables are dummy variables for whether everyone in the household agrees that the individual is the primary decision-maker in that category.

    • View popup
    Table 2

    Effect of Pension Eligibility on Household Decision Making

    (1)(2)(3)(4)(5)(6)(7)(8)
    Dependent variable: Primary decision maker for day-to-day purchasesDependent variable: Primary decision maker for all categories
    Polynomial in age of person is…
    linearquadraticcubiclinearquadraticcubic
    Panel 1: Women
    Pension eligible0.155***
    [0.0447]
    0.160***
    [0.0473]
    0.167***
    [0.0561]
    0.153***
    [0.0551]
    0.127***
    [0.0417]
    0.146***
    [0.0444]
    0.172***
    [0.0513]
    0.154***
    [0.0509]
    Presence of man 50+−0.555***
    [0.0357]
    −0.555***
    [0.0357]
    −0.556***
    [0.0358]
    −0.563***
    [0.0351]
    −0.655***
    [0.0283]
    −0.656***
    [0.0282]
    −0.657***
    [0.0283]
    −0.656***
    [0.0288]
    Presence of pension eligible man−0.056
    [0.0499]
    −0.054
    [0.0499]
    −0.054
    [0.0501]
    −0.034
    [0.0497]
    −0.0366
    [0.0348]
    −0.0305
    [0.0348]
    −0.0295
    [0.0351]
    −0.0117
    [0.0362]
    Observations1,7941,7941,7941,7941,7641,7641,7641,764
    R-squared0.3210.3210.3210.3440.4010.4020.4020.419
    Sample mean0.6420.572
    Panel 2: Men
    Pension eligible−0.026
    [0.0801]
    −0.060
    [0.0962]
    −0.091
    [0.108]
    −0.070
    [0.0953]
    −0.0536
    [0.0814]
    −0.0662
    [0.0982]
    −0.119
    [0.109]
    −0.108
    [0.0975]
    Presence of woman 50+−0.237***
    [0.0469]
    −0.234***
    [0.0471]
    −0.233***
    [0.0472]
    −0.204***
    [0.0452]
    −0.238***
    [0.0471]
    −0.237***
    [0.0475]
    −0.235***
    [0.0476]
    −0.218***
    [0.0451]
    Presence of pension eligible woman−0.046
    [0.0585]
    −0.050
    [0.0587]
    −0.053
    [0.0587]
    −0.033
    [0.0579]
    −0.0535
    [0.0580]
    −0.0548
    [0.0582]
    −0.0609
    [0.0582]
    −0.0353
    [0.0572]
    Observations1,1091,1091,1091,1091,0911,0911,0911,091
    R-squared0.0560.0570.0570.1610.0580.0580.0600.172
    Sample mean0.5740.548
    P-value for equality of female and male eligibility coefficients0.0440.0410.0340.0450.0460.0490.0160.017
    Control variablesNONONOYESNONONOYES
    • Notes: Robust standard errors in brackets are clustered at the household level. Regressions are weighted with survey post-stratification weights. Sample is restricted to black men and women aged 50–75. Control variables are number of household members who are 0–5, 6–14, 15–24, and 25–49, educational attainment category, and rural/urban status.

    • ↵*** p < 0.01,

    • ** p < 0.05,

    • * p < 0.1

    • View popup
    Table 3

    Effect of Pension Eligibility on Household Decision Making: NIDS Waves 2 and 3

    (1)(2)(3)(4)(5)(6)(7)(8)
    Dependent variable: Primary decision maker for day-to-day purchases NIDS Wave 2Dependent variable: Primary decision maker for day-to-day purchases NIDS Wave 3
    Polynomial in age of person is…
    linearquadraticcubiclinearquadraticcubic
    Panel 1: Women
    Pension eligible0.0502
    [0.0512]
    0.0343
    [0.0532]
    0.0316
    [0.0652]
    0.0353
    [0.0649]
    0.0901**
    [0.0451]
    0.0656
    [0.0490]
    0.0525
    [0.0561]
    0.0667
    [0.0537]
    Presence of man 50+−0.328***
    [0.0510]
    −0.323***
    [0.0513]
    −0.323***
    [0.0513]
    −0.349***
    [0.0484]
    −0.408***
    [0.0484]
    −0.399***
    [0.0496]
    −0.399***
    [0.0496]
    −0.422***
    [0.0487]
    Presence of pension eligible man−0.0975*
    [0.0591]
    −0.107*
    [0.0594]
    −0.107*
    [0.0594]
    −0.0750
    [0.0584]
    −0.0393
    [0.0567]
    −0.0545
    [0.0575]
    −0.0538
    [0.0575]
    −0.0334
    [0.0561]
    Observations1,9041,9041,9041,8952,2412,2412,2412,241
    R-squared0.1460.1470.1470.1930.1850.1870.1870.242
    Sample mean0.6610.664
    Panel 2: Men
    Pension eligible0.0444
    [0.0688]
    0.0491
    [0.0722]
    0.0509
    [0.0880]
    0.0649
    [0.0865]
    −0.0545
    [0.0716]
    −0.0678
    [0.0731]
    −0.0883
    [0.0883]
    −0.0872
    [0.0811]
    Presence of woman 50+−0.420***
    [0.0419]
    −0.417***
    [0.0425]
    −0.417***
    [0.0426]
    −0.368***
    [0.0440]
    −0.354***
    [0.0429]
    −0.365***
    [0.0443]
    −0.364***
    [0.0446]
    −0.295***
    [0.0429]
    Presence of pension eligible woman0.0496
    [0.0516]
    0.0449
    [0.0537]
    0.0450
    [0.0546]
    0.0621
    [0.0557]
    −0.0669
    [0.0510]
    −0.0472
    [0.0543]
    −0.0481
    [0.0545]
    −0.0454
    [0.0540]
    Observations1,1121,1121,1121,1041,2771,2771,2771,277
    R-squared0.1420.1420.1420.2450.127
    0.406
    0.1290.1290.266
    Sample mean0.389
    P-value for equality of female and male eligibility coefficients0.9470.8690.8630.9880.0830.1230.1710.11
    Control variablesNONONOYESNONONOYES
    • Notes: Robust standard errors in brackets are clustered at the household level. Regressions are weighted with survey post-stratification weights. Sample is restricted to black men and women aged 50–75. Control variables are number of household members who are 0–5, 6–14, 15–24, and 25–49, educational attainment category, and rural/urban status.

    • ↵*** p < 0.01,

    • ↵** p < 0.05,

    • ↵* p < 0.1

    • View popup
    Table 4

    Identity of Household Decision Maker in Non-Eligible Households

    Households with a: Woman 50–59
    No man 50+ in hhMan 50+ in hh
    Panel 1: Decision maker refers to day-to-day purchases
    Decision maker is woman 50+
    (percent)
    84.028.0
    Decision maker is man 50+
    (percent)
    47.3
    Decision maker is woman 18–49 (percent)  1.7  0.3
    Decision maker is man 18–49 (percent)  3.1  0.0
    Household disagrees on decision maker (percent)11.124.3
    Observations576321
    Panel 2: Decision maker refers to all four categories
    Decision maker is woman 50+ (percent)79.015.1
    Decision maker is man 50+ (percent)45.1
    Decision maker is woman 18–49 (percent)  1.4  0.0
    Decision maker is man 18–49 (percent)  2.6  0.0
    Household disagrees on decision maker (percent)16.939.4
    Observations567317
    • Notes: Author’s calculations from 2008 NIDS.

    • View popup
    Table 5

    Effect of Female Pension Eligibility on Decision Making of Others in the Household

    (1)(2)(3)(4)(5)(6)(7)(8)(9)
    Dependent variable: Person of opposite sex aged 50 + is primary decision makerDependent variable: Household disagreement on identity of primary decision maker
    Man 50 + in hhNo man 50 + in hhMan 50 + in hh
    Polynomial in age of oldest women is…
    linearquadraticcubiclinearquadraticcubiclinearquadraticcubic
    Panel 1: Dependent variable refers to day-to-day purchases
    Pension eligible woman−0.140
    [0.111]
    −0.105
    [0.112]
    −0.0964
    [0.136]
    −0.0946***
    [0.0344]
    −0.112***
    [0.0360]
    −0.126***
    [0.0437]
    −0.106
    [0.107]
    −0.134
    [0.105]
    −0.0894
    [0.144]
    Presence of pension eligible man0.0845
    [0.0680]
    0.0958
    [0.0681]
    0.0965
    [0.0683]
    −0.00776
    [0.0548]
    −0.0167
    [0.0556]
    −0.0134
    [0.0570]
    Observations5615615611,1891,1891,189561561561
    R-squared0.0100.0170.0170.0070.0080.0080.0040.0100.011
    Sample mean0.4880.09000.223
    Panel 2: Dependent variable refers to all four decision categories
    Pension eligible woman−0.0973
    [0.111]
    −0.0718
    [0.113]
    −0.0559
    [0.136]
    −0.135***
    [0.0426]
    −0.167***
    [0.0510]
    −0.221***
    [0.0560]
    0.0183
    [0.112]
    −0.0262
    [0.108]
    0.0235
    [0.140]
    Presence of pension eligible man0.0731
    [0.0678]
    0.0815
    [0.0677]
    0.0826
    [0.0677]
    −0.0264
    [0.0704]
    −0.0409
    [0.0705]
    −0.0374
    [0.0711]
    Observations5545545541,1671,1671,167554554554
    R-squared0.0050.0090.0090.0090.0120.0150.0020.0130.014
    Sample mean0.4580.1420.388
    • Notes: Robust standard errors in brackets are clustered at the survey cluster level. Regressions are weighted with survey post-stratification weights. Sample is restricted to households with a black woman aged 50–75.

    • *** p < 0.01,

    • ** p < 0.05,

    • ↵* p < 0.1

    • View popup
    Table 6

    Pension Eligibility and Personal Income Share in NIDS Wave 2

    (1)(2)(3)(4)(5)(6)
    Dependent variable: Personal income share in Wave 2, aggregated by Wave 2 householdDependent variable: Personal income share in Wave 2, aggregated by Wave 1 household
    Polynomial in age of person is…
    linearquadraticcubiclinearquadraticcubic
    Panel 1: Women
    Pension eligible in Wave 211.92***
    [3.706]
    11.04***
    [3.863]
    11.10***
    [3.843]
    10.61***
    [3.861]
    10.22**
    [4.010]
    7.333
    [4.943]
    Observations1,7121,7121,7121,7121,7121,712
    R-squared0.1230.1230.1260.1000.1000.101
    Sample mean44.4245.13
    Panel 2: Men
    Pension eligible in Wave 2−0.899
    [5.945]
    0.0164
    [6.431]
    2.422
    [7.732]
    1.276
    [5.804]
    1.007
    [6.236]
    −1.463
    [7.486]
    Observations975975975975975975
    R-squared0.1090.1540.1550.1210.1210.122
    Sample mean41.1141.53
    P-value for equality of female and male eligibility coefficients0.0700.1200.1170.1690.1990.303
    Controls for opposite gender person aged 50+ and opposite gender pension eligible person in.WAVE 2WAVE 2WAVE 2WAVE 1WAVE 1WAVE 1
    • Notes: Robust standard errors in brackets are clustered at the Wave 2 household level in Columns 1–3 and the Wave 1 household level in Columns 4–6. Regressions are weighted with survey post-stratification weights for Wave 2 in Columns 1–3 and Wave 1 in Columns 4–6. Sample is restricted to black men and women aged 50–75 in NIDS Wave 2.

    • ↵*** p < 0.01,

    • ↵** p < 0.05,

    • * p < 0.1

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  • Free alternate access to The Journal of Human Resources supplementary materials is available at https://uwpress.wisc.edu/journals/journals/jhr-supplementary.html

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Journal of Human Resources: 51 (4)
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Bargaining with Grandma: The Impact of the South African Pension on Household Decision-Making
Kate Ambler
Journal of Human Resources Oct 2016, 51 (4) 900-932; DOI: 10.3368/jhr.51.4.0314-6265R1

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Bargaining with Grandma: The Impact of the South African Pension on Household Decision-Making
Kate Ambler
Journal of Human Resources Oct 2016, 51 (4) 900-932; DOI: 10.3368/jhr.51.4.0314-6265R1
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  • Article
    • Abstract
    • I. Introduction
    • II. Background
    • III. Identification Strategy
    • IV. Impacts of Pension-eligibility on Decision-making
    • V. Pension-eligibility and Personal Income Share
    • VI. Discussion
    • VII. Changes in Household Composition
    • VIII. Conclusion
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