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Stellenbosch Working Paper Series No. WP13/2017

Publication date: October 2017

Existing work suggests that the South African state old age pension, through, increasing female decision-making, has a positive impact on the well being of children. This study investigates this concept in two parts. Part 1 aims to answer the question of whether the old age pension has a different impact on child depravation depending on the gender of the pension recipient. Part 2 investigates whether the old age pension influences household decision-making dynamics. Using all four waves of the national income dynamics study, identification comes from comparing each individual before and after receiving a pension. This study finds some evidence of a gender bias by both male and female pension recipients; females favour girls while males favour boys. The effect of the state old age pension on child deprivation (as measured by weight for height) is however not found to be robust to different model specifications. This paper exploits the effect of income on bargaining power to explain the effect of pensions on the relative decision making power within a household. We find evidence of shifts in the decision-making dynamics with pension receipt. These shifts are greater when the pension recipient is female. The results indicate that resources held by grandmothers enable woman within the household to be primary decision makers. We conclude that the reason we see a differential effect on child outcomes depending on the gender of the pension recipient is because of a change in household decision-making dynamics. The gains in decision-making power of females, caused by the pensions, lead to lower child deprivation rates. The evidence indicates that although the state old age pension is meant for the elderly it has important implications for child deprivation. Some light is shed on the mechanism through which the pension results in positive impacts for children – by increasing the decision making power of women. The evidence supports the hypothesis that resource control matters for intra-household allocation.

JEL Classification:
J16, C21, D13, H57

Female autonomy, Household decision-making, Child nutrition, Public pensions, South Africa