Working Paper- Do Pensions Reduce the Incentive to Work? Evidence From Egypt

Source: Economic Research Forum
Author(s): Mohamed El Hedi Arouri, Nguyen Viet Cuong

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In this study, we investigate the impact of the receipt of contributory and social pensions on labor supply in Egypt using fixed-effects regressions and panel data from the Egypt Labor Market Panel Surveys in 2006 and 2012. We find that the receipt of contributory pension reduces the probability of working of people aged 15 to 60 as well as people above 60 years old. We also find a differential impact of contributory pensions. When living in a household with pensions, males, urban people, and those with high levels of education are less likely to work than females, rural people, and ones with low levels of education. Regarding the receipt of social pensions, it has no significant effects on the probability of working. A possible reason is that social pensions are remarkably lower than contributory pensions, and the small amount of social pensions is not enough to reduce the working incentive…

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