Abstract
Non-contributory pensions are becoming increasingly prevalent worldwide. As their effects are likely to be context-dependent, evaluating their effects in a wide range of settings is important for establishing the external validity of the non-contributory pension literature. We use a new monthly panel dataset and a difference-in-differences strategy to study the effect of a new non-contributory pension in Singapore (the Silver Support Scheme or SSS) on labour supply, work expectations, private cash transfers, and expenditure, 1 year after its implementation. We find no evidence that receiving SSS payouts led to a fall in labour supply, work expectations, or the receipt of private cash transfers in the first year after SSS implementation—our estimated effects for these outcomes are statistically insignificant and are either negative but close to zero or positive. Our point estimates of the effects of receiving SSS payouts on expenditure are positive but too imprecise to allow us to make any definitive conclusions. Lastly, we do not find evidence of anticipatory effects among younger individuals who are not age-eligible for payouts yet. These results, when coupled with our finding in a companion paper that the SSS improved recipients’ subjective well-being, suggest that the SSS was successful in improving recipients’ welfare without substantial crowding out of private transfers or changes in labour market behaviour of current and future SSS beneficiaries.
Highlights
Non-contributory pensions are becoming increasingly prevalent worldwide (International Labour Office 2014)
Notes: 1Standard errors clustered at the household level in parentheses. ***, **, and * represent statistical significance at the 1, 5, and 10% level of significance respectively 2Dependent variables are shown at the top of each column
The sample is restricted to respondents who are age-eligible for Silver Support Scheme (SSS), Singapore citizens, live in public housing flats, and with a propensity score of 0.2–0.8 4Mean and standard deviation statistics are based on pre-announcement levels of the dependent variable for respondents who received SSS payouts to amount of income received from work suggest that it is unlikely that labour supply fell along the intensive margin
Summary
Non-contributory pensions are becoming increasingly prevalent worldwide (International Labour Office 2014). In a supplementary analysis (discussed in more detail only in Section 7) based on younger individuals who are not age-eligible for payouts yet, we find no evidence that expecting to receive the SSS led to changes in private cash transfers, labour-related decisions, or expenditure. On the other hand, Hernani-Limarino and Mena (2015), Behrman et al (2011), and Cheng et al (2018) find little evidence that the introduction or expansion of non-contributory old age pensions in Bolivia, Chile, and China had an effect on receipt of private transfers Against this backdrop, our finding that SSS recipients do not appear to receive less private transfers may not be surprising. Our results for labour decisions and private transfers suggest that the effects of non-contributory pensions are likely to vary by institutional context and payout levels. The set-up for determining eligibility and disbursing payouts suggests that Singaporeans who are eligible for the SSS payouts will almost certainly receive their payouts
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