Subjective well-being impact of old age pension in South Africa: A difference in difference analysis across the gender divide

Abstract

Background: South Africa provides old age pension (OAP), a non-contributory means-tested income transfer to persons aged 60 and above. More than two-thirds of the elderly population report receiving the OAP. Women have historically had a lower pension eligibility age of 60, while the eligibility of men decreased from 65 to 60 between 2008 and 2010.

Aim: This study analyses the impact of the OAP on the subjective well-being of the elderly in South Africa. The study aims at understanding the differential impact on the subjective well-being of male and female recipients.

Methods: The study adopts the difference in difference (DiD) impact evaluation framework to establish the impact of OAP using a sub-sample of data for elderly persons aged between 55 and 64, collected from the first four waves of the National Income Dynamics study. Linear and non-linear DiD models are estimated as robustness checks given the ordinal nature of the dependent variable.

Results: The OAP variable consistently produced positive and significant estimates for the sample as a whole. Further, anticipatory effect of OAP was not found to exist. A gender specific analysis indicates that female recipients have a positive and significant change in well-being as a result of OAP, while male recipients did not.

Conclusion: The difference in the well-being impact of OAP between male and female recipients can be attributed to the gender difference in the use and meaning of pensions. Our findings question the uniform criteria introduced for male and female recipients for OAP in South Africa.