IDEAS home Printed from https://ideas.repec.org/p/rbz/wpaper/11057.html
   My bibliography  Save this paper

Cash transfers and prices what is the impact of social welfare on prices

Author

Listed:
  • Chloe Allison
  • Neryvia Pillay

Abstract

South Africa faces high inequality and numerous challenges posed by the long-lasting legacies of apartheid. South Africas generous social welfare system represents a major government intervention to address these challenges. Using a province fixed effects model with annual price and household survey data, we study the relationship between existing grants and prices from 2009 to 2021. We observe a significant increase in the prices of goods and services consumed by individuals in the poorest deciles. We find that results are dependent on the type of grant received and the characteristics of beneficiary households. We also find that price increases are particularly evident in markets with inelastic supply, where the demand for goods and services outpaces their supply.

Suggested Citation

  • Chloe Allison & Neryvia Pillay, 2024. "Cash transfers and prices what is the impact of social welfare on prices," Working Papers 11057, South African Reserve Bank.
    • Handle: RePEc:rbz:wpaper:11057
    as

    Download full text from publisher

    File URL: https://www.resbank.co.za/content/dam/sarb/publications/working-papers/2024/cash-transfers-and-prices-what-is-the-impact-of-social-welfare-on-prices.pdf
    File Function: Revision
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2018. "Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany," American Economic Review, American Economic Association, vol. 108(2), pages 393-418, February.
    2. Goohoon Kwon & Lavern McFarlane & Wayne Robinson, 2006. "Public Debt, Money Supply, and Inflation: A Cross-Country Study and Its Application to Jamaica," IMF Working Papers 2006/121, International Monetary Fund.
    3. Jesse M Cunha & Giacomo De Giorgi & Seema Jayachandran, 2019. "The Price Effects of Cash Versus In-Kind Transfers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 240-281.
    4. Johannes Fedderke & Yang Liu, 2018. "Inflation in South Africa: An Assessment of Alternative Inflation Models," South African Journal of Economics, Economic Society of South Africa, vol. 86(2), pages 197-230, June.
    5. Case, Anne & Deaton, Angus, 1998. "Large Cash Transfers to the Elderly in South Africa," Economic Journal, Royal Economic Society, vol. 108(450), pages 1330-1361, September.
    6. Scott R. Baker & Stephen Teng Sun & Constantine Yannelis, 2020. "Corporate Taxes and Retail Prices," NBER Working Papers 27058, National Bureau of Economic Research, Inc.
    7. Dennis Egger & Johannes Haushofer & Edward Miguel & Paul Niehaus & Michael Walker, 2022. "General Equilibrium Effects of Cash Transfers: Experimental Evidence From Kenya," Econometrica, Econometric Society, vol. 90(6), pages 2603-2643, November.
    8. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    9. Sudhanshu Handa & Silvio Daidone & Amber Peterman & Benjamin Davis & Audrey Pereira & Tia Palermo & Jennifer Yablonski, 2018. "Myth-Busting? Confronting Six Common Perceptions about Unconditional Cash Transfers as a Poverty Reduction Strategy in Africa," The World Bank Research Observer, World Bank, vol. 33(2), pages 259-298.
    10. Haroon Bhorat & Morné Oosthuizen & Ben Stanwix, 2021. "Social Assistance Amidst the COVID‐19 Epidemic in South Africa: A Policy Assessment," South African Journal of Economics, Economic Society of South Africa, vol. 89(1), pages 63-81, March.
    11. Margaret Triyana, 2016. "Do Health Care Providers Respond to Demand-Side Incentives? Evidence from Indonesia," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 255-288, November.
    12. Manuela Angelucci & Giacomo De Giorgi, 2009. "Indirect Effects of an Aid Program: How Do Cash Transfers Affect Ineligibles' Consumption?," American Economic Review, American Economic Association, vol. 99(1), pages 486-508, March.
    13. José Augusto Lopes da Veiga & Alexandra Ferreira-Lopes & Tiago Neves Sequeira, 2016. "Public Debt, Economic Growth and Inflation in African Economies," South African Journal of Economics, Economic Society of South Africa, vol. 84(2), pages 294-322, June.
    14. Beegle, Kathleen & Galasso, Emanuela & Goldberg, Jessica, 2017. "Direct and indirect effects of Malawi's public works program on food security," Journal of Development Economics, Elsevier, vol. 128(C), pages 1-23.
    15. Paciorek, Andrew, 2013. "Supply constraints and housing market dynamics," Journal of Urban Economics, Elsevier, vol. 77(C), pages 11-26.
    16. Steenkamp, Daan & Havemann, Roy & Hollander, Hylton, 2022. "The macroeconomics of establishing a basic income grant in South Africa," MPRA Paper 114614, University Library of Munich, Germany.
    17. Deon Filmer & Jed Friedman & Eeshani Kandpal & Junko Onishi, 2023. "Cash Transfers, Food Prices, and Nutrition Impacts on Ineligible Children," The Review of Economics and Statistics, MIT Press, vol. 105(2), pages 327-343, March.
    18. BILDIRICI, Melike & ERSIN, Ozgur Omer, 2007. "Domestic Debt, Inflation And Economic Crises: A Panel Cointegration Application To Emerging And Developed Economies," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(1).
    19. World Bank, 2018. "The State of Social Safety Nets 2018," World Bank Publications - Books, The World Bank Group, number 29115.
    20. Frances Lund, 2002. "'Crowding in' care, security and micro-enterprise formation: revisiting the role of the state in poverty reduction and in development," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(6), pages 681-694.
    21. Rulof Petrus Burger & Lodewicus Charl Coetzee & Carl Friedrich Kreuser & Neil Andrew Rankin, 2017. "Income and Price Elasticities of Demand in South Africa: An Application of the Linear Expenditure System," South African Journal of Economics, Economic Society of South Africa, vol. 85(4), pages 491-514, December.
    22. Johannes Hermanus Kemp, 2019. "The Elasticity of Taxable Income: The Case of South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 87(4), pages 417-449, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simon Franklin & Clément Imbert & Girum Abebe & Carolina Mejia-Mantilla, 2024. "Urban Public Works in Spatial Equilibrium: Experimental Evidence from Ethiopia," American Economic Review, American Economic Association, vol. 114(5), pages 1382-1414, May.
    2. Leight, Jessica & Hirvonen, Kalle & Zafar, Sarim, 2024. "The effectiveness of cash and cash plus interventions on livelihoods outcomes: Evidence from a systematic review and meta-analysis," OSF Preprints dnc2r, Center for Open Science.
    3. McIntosh, Craig & Zeitlin, Andrew, 2022. "Using household grants to benchmark the cost effectiveness of a USAID workforce readiness program," Journal of Development Economics, Elsevier, vol. 157(C).
    4. Kate Ambler & Alan de Brauw & Susan Godlonton, 2018. "Rural Labor Market Responses to Large Lumpy Cash Transfers: Evidence from Malawi," Department of Economics Working Papers 2018-11, Department of Economics, Williams College.
    5. Merfeld, Joshua D., 2019. "Spatially heterogeneous effects of a public works program," Journal of Development Economics, Elsevier, vol. 136(C), pages 151-167.
    6. Agha Ali Akram & Shyamal Chowdhury & Ahmed Mushfiq Mobarak, 2017. "Effects of Emigration on Rural Labor Markets," NBER Working Papers 23929, National Bureau of Economic Research, Inc.
    7. Aimola Akingbade U. & Odhiambo Nicholas M., 2022. "Is the effect of public debt on inflation symmetric or asymmetric? Evidence from the Gambia," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 8(1), pages 41-57, June.
    8. Avitabile, Ciro, 2021. "Spillovers and Social Interaction Effects in the Demand for Preventive Healthcare: Evidence from the PROGRESA program," Journal of Health Economics, Elsevier, vol. 79(C).
    9. Merfeld, Joshua D, 2017. "Spatially Heterogeneous Effects of a Public Works Program," MPRA Paper 80630, University Library of Munich, Germany.
    10. Ihsaan BASSIER & Joshua BUDLENDER, 2024. "Methods for Credible Evaluation of Programme Stimulus Effects in South Africa," Working Paper 53315978-8164-44f9-8141-5, Agence française de développement.
    11. Galloway, Tracey & Li, Nicholas, 2023. "Pass-through of subsidies to prices under limited competition: Evidence from Canada’s Nutrition North program," Journal of Public Economics, Elsevier, vol. 225(C).
    12. Borga, Liyousew G. & D’Ambrosio, Conchita, 2021. "Social protection and multidimensional poverty: Lessons from Ethiopia, India and Peru," World Development, Elsevier, vol. 147(C).
    13. Galiani, Sebastian & Gertler, Paul & Bando, Rosangela, 2016. "Non-contributory pensions," Labour Economics, Elsevier, vol. 38(C), pages 47-58.
    14. Margaret Triyana, 2016. "Do Health Care Providers Respond to Demand-Side Incentives? Evidence from Indonesia," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 255-288, November.
    15. Jules Gazeaud & Eric Mvukiyehe & Olivier Sterck, 2023. "Cash Transfers and Migration: Theory and Evidence from a Randomized Controlled Trial," The Review of Economics and Statistics, MIT Press, vol. 105(1), pages 143-157, January.
    16. Orazio Attanasio & Elena Pastorino, 2020. "Nonlinear Pricing in Village Economies," Econometrica, Econometric Society, vol. 88(1), pages 207-263, January.
    17. Nikolov, Plamen & Bonci, Matthew, 2020. "Do public program benefits crowd out private transfers in developing countries? A critical review of recent evidence," World Development, Elsevier, vol. 134(C).
    18. Waidler, Jennifer, 2016. "On the fungibility of public and private transfers: A mental accounting approach," MERIT Working Papers 2016-060, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. Jude Okechukwu Chukwu, 2013. "Budget Deficits, Money Growth and Price Level in Nigeria," African Development Review, African Development Bank, vol. 25(4), pages 468-477, December.
    20. Gupta, Prankur & Stein, Daniel & Longman, Kyla & Lanthorn, Heather & Bergmann, Rico & Nshakira-Rukundo, Emmanuel & Rutto, Noel & Kahura, Christine & Kananu, Winfred & Posner, Gabrielle & Zhao, K.J. & , 2024. "Cash transfers amid shocks: A large, one-time, unconditional cash transfer to refugees in Uganda has multidimensional benefits after 19 months," World Development, Elsevier, vol. 173(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbz:wpaper:11057. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jessica VanWyk (email available below). General contact details of provider: https://edirc.repec.org/data/rbagvza.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.