Date of Graduation

Spring 5-21-2021

Document Type

Thesis

Degree Name

Master of Science in International and Development Economics (MSIDEC)

College/School

College of Arts and Sciences

Department/Program

Economics

First Advisor

Dr. Jesse Anttila-Hughes

Abstract

The welfare effects of public social security programs have been extensively studied in the context of developing economies where the reliance on state is much larger for the provision of basic goods and services. Pension schemes and reforms, however, are met with much less fiscal investment considering the demographic composition and the requisite demands of the larger proportion of youth- and working age- population. Given the rapid pace of demographic transition, there will inevitably be an ever-growing pressure and economic problems associated with aging are bound to become more apparent. As transitioning into retirement is an under-studied area in countries like India, this paper examines the effect of pension expansion on elderly men and women labor force participation using a fuzzy regression discontinuity approach in a two- staged least squares (2SLS) model. The informal nature of labor market, particularly for the beneficiaries of a public-funded pension makes it important to look at how the aging individuals respond to easing liquidity constraints from an alternate source of income post-retirement. The paper uses the 2nd wave of IHDS data and finds that the expansion leads to a significant increase in the withdrawal of men from the labor force by 57.3% conditional on pension receipt under the scheme. I observe that it affects men both on an extensive as well as intensive margin, but no such significant effect on women’s labor market participation outcomes.

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