We study empirically the effect of a non-contributory pension in Bolivia on labor supply, consumption smoothing and households living arrangements. We estimate the effect with a regression discontinuity design since individuals’ eligibility for the pension is discontinuous at age 60, and separately for each spouse to test for a gender effect in households’ decisions. We find that the pension-induced extensive and intensive margins of labor supply are negative and they are mainly driven by urban and wealthy households. In addition, we
find a positive although weakly significant effect on non-food consumption and on the probability that grandchildren live with their grandparents, which is mainly driven by poor and rural households.

Joint work with Miguel Angel Borrella and Mariano Bosch

JEL Classification: H2, H3, J2
Keywords: Bolivia, consumption, labor supply, non-contributory pension, poverty, regression discontinuity, Renta Dignidad, unitary household model