Abstract
I examine how an exogenous change in individual income affects decision-making in the household. Using the age discontinuity in eligibility for the South African pension, I find that eligible women are 15 percentage points more likely to be the primary decision-maker in the household than noneligible women. This corresponds with a large increase in their share of household income. There are no parallel effects for men. Due to labor force withdrawal, male income does not increase with eligibility, suggesting that their status in the household is unchanged.
Highlights
The growing importance of cash transfers as an antipoverty tool in the developing world has highlighted the importance of understanding how households make decisions and allocate resources
This shift has been supported by a growing amount of empirical evidence rejecting the predictions of the unitary model. These papers are largely based on the reduced form effect of income transfers on household outcomes, negating the unitary model but providing little specific evidence in support of alternative explanations. This paper addresses this gap in the literature by examining the effects of changes in income dynamics on direct measures of household decision-making, utilizing the age discontinuity in eligibility for the South African pension
If the pension is altering male bargaining power, it is doing so in such a way that is not reflected by the decision-making or income measures on the National Income Dynamics Survey (NIDS) survey. This analysis of how pension-eligibility affects decision-making and income share in the household is interesting largely because we expect these changes to translate into changes in measures of well-being in the household
Summary
The growing importance of cash transfers as an antipoverty tool in the developing world has highlighted the importance of understanding how households make decisions and allocate resources. These papers are largely based on the reduced form effect of income transfers on household outcomes, negating the unitary model but providing little specific evidence in support of alternative explanations This paper addresses this gap in the literature by examining the effects of changes in income dynamics on direct measures of household decision-making, utilizing the age discontinuity in eligibility for the South African pension. Empirical work on this topic has generally focused on rebutting the predictions of the unitary model by examining outcomes after exogenous changes in income.
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