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Disability Grant and Individual Labour Force Participation: The Case of South Africa

Author

Listed:
  • George Mutasa

    (Development Policy Research Unit
    Researcher)

Abstract

Despite the explosive growth in the number of people receiving disability benefits in South Africa, very little is known about the labour supply effects of the disability grant (DG). This study investigates the impact of disability grant receipt on labour force participation. Consideration is given to potential bias that may arise from unobserved confounding factors. The study utilises data drawn from the 2007 wave of the General Household Survey (GHS) and implements a three-step methodology in a comparative perspective. Firstly, a standard probit regression of labour force participation is applied, followed by an instrumental variable regression to correct for possible endogeneity of DG take up. Finally, the sensitivity and robustness of the results is checked by implementing a variety of propensity score matching techniques. The results overall suggest that the DG receipt has substantial work disincentive effects, but the magnitude of the effect differs between parametric and non-parametric estimators.

Suggested Citation

  • George Mutasa, 2012. "Disability Grant and Individual Labour Force Participation: The Case of South Africa," Working Papers 12156, University of Cape Town, Development Policy Research Unit.
    • Handle: RePEc:ctw:wpaper:12156
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    File URL: http://hdl.handle.net/11427/7299
    File Function: First version, 2012
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    References listed on IDEAS

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    Cited by:

    1. Haroon Bhorat & Timothy Köhler & David de Villiers, 2023. "Can Cash Transfers to the Unemployed Support Economic Activity? Evidence from South Africa," Working Papers 202301, University of Cape Town, Development Policy Research Unit.

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    More about this item

    Keywords

    Disability Grant; Labour Force participation; Propensity score;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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