RECONSIDERING THE EFFECTS OF THE STATE OLD AGE PENSION ON THE LIVING ARRANGEMENTS OF ELDERLY SOUTH AFRICANS

The South African State Old Age Pension (SOAP) forms the backbone of social assistance in South Africa. The impact of this pension on its recipients has consequently come under much scrutiny. Previous research on the pension has been primarily concerned with estimating the behavioral effects of the pension on the members of pension households. However, because these studies have used cross-sectional data, the findings have been predicated upon the assumption that the composition of pension households does not change on pension receipt. This paper questions the plausibility of this assumption by examining the effect of the SOAP on the living arrangements of recipients. The results support the argument that the living arrangements of pensioners will be affected by pension receipt, and that the results from past studies of the pension may consequently have been misinterpreted. The study employs two different methods to achieve its aim, namely a regression discontinuity approach using 2001 census data and a cohort approach using a series of cross-sectional data from 1994-2010.