How Public Pension affects Elderly Labor Supply and Well-being: Evidence from India

• Public pension in India lowered the employment of low educated men aged 55–70.
• Employment effect is low compared to effect of social security in rich countries.
• Public pension in India raised family expenditures, lowering poverty.
• Estimates suggest low pension coverage of elderly persons who were illiterate.
• Households spent most of the pension income on medical care and education.

SummaryI study the effect of a recent expansion in India’s National Old Age Pension Scheme on elderly well-being. Estimates suggest that public pension has a modestly negative effect on the employment of elderly/near elderly men with a primary or lower education but no effect on the employment of similar women. Pension raised family expenditures, lowering poverty, and the effect was smaller on families headed by illiterate persons suggesting lower pension coverage of this most disadvantaged group. Further, I find that households spent most of the pension income on medical care and education, suggesting possible intra-family transfers across generations.