Pension Transfers and farm household technical efficiency: Evidence from South Africa

This article analyzes the effect of entitlements from the Old Age Pension Program of South Africa on household technical efficiency using a sample of farm households in South Africa's KwaZulu‐Natal province. The analysis is at the household level, and off‐farm activities are considered as additional outputs in a nonparametric estimation of technical efficiency. This approach captures the jointness between farm and off‐farm activities. The pension's effect is identified by exploiting the age‐eligibility criteria in the pension program. Results show a positive effect of the pension and suggest that this large cash transfer can improve households’ ability to make use of the best available technologies.