Plugging the Welfare Gap: The Role of Kinship Transfers in South Africa

What are the empirical patterns and significance of private non-market transfers between family members living in separate households? Answers to such a question should aid policymakers in designing social and economic policies that allow for better distribution of public programmes, and illuminate the extent to which social objectives are being met privately. Compared to the extensive literature on the intra-household private transfers in general, the literature on inter-household transfer behaviours is limited, and hardly any, interrogate the topic at the individual-level. This paper attempts to fill this gap by analysing transfer patterns between familial-related individuals living in separate households. My evidence indicates that these transfers respond to income and vulnerability indicators, and constitute a sizeable portion of total incomes. Thus, these transfers are likely serving both consumption smoothing and income equalisation purposes. Ultimately, the magnitude of these transfers suggest that measurements of income distribution which do not include transfer receipts are likely to be biased.