Household Responses to Adverse Income Shocks: Pensioner OutMigration and Mortality

How do households cope with negative income shocks in developing countries? South Africa’s unique social pension system results in most of the poor elderly receiving a generous income transfer from the state. This generally makes the pensioner the pri-mary ‘breadwinner ’ in the household. Several researchers have shown that pension recipiency in South Africa results in improved household welfare, along dimensions in-cluding child health, schooling enrollment of children and the consumption of leisure of prime aged adults. In this paper, I estimate the magnitude of the changes in household composition and labor force activity, amongst the remaining members of the household, that correlate with a pensioner leaving the household. I use nationally representative matched panel data from several waves of the South African Labour Force Surveys. I find that households experience a net increase in adults, particularly of females. There is an increase in both the number of employed middle-aged adults in the household, a