Direct and Indirect Income Support and Their Determinants: Developing an Income Profile for Older Adults in Sri Lanka

Abstract

Given the rapid increase in population aging and older population dependency rates, a sound understanding of old-age income support systems is vital for formulating effective policy responses. This research studies old-age income sources to develop an income profile for older adults in Sri Lanka, measuring direct and indirect income sources using nationally representative survey data from Household Income and Expenditure Surveys 1995/1996 and 2016. In the absence of direct information on intergenerational transfers, we investigate the material support older adults receive from their families, an essential source of income in many developing countries. We found that while indirect income support, cash transfers, and employment are vital sources of old-age income, there have been significant changes in the composition of old-age income over time. Indirect income support is becoming less important, and income from employment and formal cash transfers is becoming more prominent. These results highlight potential avenues to improve the economic well-being of older adults, such as increasing the mandatory retirement age and taking measures to provide decent employment opportunities for older adults while also expanding pension coverage to all types of workers and access to social security for vulnerable groups such as women or the poor.