Retiree Welfare and the 2009 Pension Increase: Impacts from an Australian Experiment

Abstract

The welfare effects from the 2009 increase in the age pension are evaluated using a quasi‐experimental, difference‐in‐difference regression framework. Using microdata to exploit the exogenous and large increase in the single‐person pension rate, the research finds significant improvements in the material welfare of single age pensioners. In particular, non‐housing and total consumption rose by 7 per cent and 4 per cent, respectively. The effects were amplified among the poorest retirees. The study extends the literature on the welfare benefits of pension programs, and provides evidence that the policy changes were highly effective in lifting the material welfare of the targeted beneficiaries.