Employing South Africa’s first nationally representative panel data set, I find that having old
age pension recipients in the household adversely affects employment outcomes of prime-aged
adults both by reducing the probability that the unemployed find work and by increasing the
likelihood that the previously employed lose their job. These effects seems to operate through
the income mechanism: an increase in pension resources increases the reservation wage and
lowers labour force participation of prime-aged household members. By contrast I find evidence
against the hypothesis that pensioners provide childcare which allows parents to work. Instead
gaining a pensioner lowers the probability that mothers are employed. Adverse employment
effects are found for salaried work and self-employment while the pension does not affect casual
work. Impact estimates are larger in metropolitan areas which questions previous studies that
find that pension resources finance labour migration. Results are robust to a series of novel
robustness tests that exploit institutional features of the old age pension and disability grant.