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Poverty, Inequality and the Role of Social Grants: An Analysis using Decomposition Techniques

Author

Listed:
  • Paula Armstrong

    (Department of Economics, University of Stellenbosch)

  • Cobus Burger

    (Department of Economics, University of Stellenbosch)

Abstract

Despite South Africa’s transition from apartheid in 1994, the social landscape is still fragmented along racial lines. However, South Africa has an impressive social grants system by international standards, with social assistance spending as a percentage of GDP comparing to Western European countries during the 1980s (the height of the welfare state). This paper investigates the impact of social grants poverty and inequality in South African. Using the Income and Expenditure Survey of 2005 (IES2005) the normalized Foster-Greer-Thorbecke (FGT) measure and the General Entropy (GE) measure (to assess the impact of social grants on poverty and inequality, respectively), it is found that social grants have a considerable impact on poverty, and that this impact increases as the poverty measure being used becomes more sensitive to the severity of poverty. In terms of inequality, it is found that social grants have a negligible impact. The reason for this is that inequality is largely driven by the upper end of the income distribution – a group who do not receive social grants.

Suggested Citation

  • Paula Armstrong & Cobus Burger, 2009. "Poverty, Inequality and the Role of Social Grants: An Analysis using Decomposition Techniques," Working Papers 15/2009, Stellenbosch University, Department of Economics.
    • Handle: RePEc:sza:wpaper:wpapers87
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    File URL: https://www.ekon.sun.ac.za/wpapers/2009/wp152009/wp-15-2009.pdf
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    Citations

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    Cited by:

    1. Ivan Turok & Josh Budlender & Justin Visagie, 2017. "The Role of Informal Urban Settlements in Upward Mobility," Working Papers 201701, University of Cape Town, Development Policy Research Unit.
    2. Stanley Sharaunga, 2019. "The Effectiveness of Women's Skills Development to Household Poverty Reduction: The Case of Msinga Rural Areas," Poverty & Public Policy, John Wiley & Sons, vol. 11(1-2), pages 73-98, July.
    3. Posel, Dorrit & Rogan, Michael, 2014. "Measured as poor versus feeling poor: Comparing objective and subjective poverty rates in South Africa," WIDER Working Paper Series 133, World Institute for Development Economic Research (UNU-WIDER).
    4. Biyase, Mduduzi, 2018. "Assessing the impact of social grants on household welfare using morning after simulation and PSM approach," MPRA Paper 84477, University Library of Munich, Germany.
    5. Jude Okechukwu Chukwu, 2019. "Poverty Impact of Variations in Within-group and Between-group Inequality in Nigeria: New Estimates Using Two Household Survey Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(2), pages 539-549, January.
    6. Stanley Sharaunga & Maxwell Mudhara, 2021. "Analysis of Livelihood Strategies for Reducing Poverty Among Rural Women's Households: A Case Study of KwaZulu‐Natal, South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(1), pages 127-150, January.
    7. Priscilla Gutura, 2014. "Boosting Their Stomachs’: The Role of Social Grants in South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 6(2), pages 105-119.
    8. Shaukat Ansari, 2022. "Cash Transfers, International Finance and Neoliberal Debt Relations: The Case of Post‐apartheid South Africa," Development and Change, International Institute of Social Studies, vol. 53(3), pages 551-575, May.
    9. Luca Tiberti & Hélène Maisonnave & Margaret Chitiga & Ramos Mabugu & Véronique Robichaud & Stewart Ngandu, 2013. "The Economy-wide Impacts of the South African Child Support Grant: a Micro-Simulation-Computable General Equilibrium Analysis," Cahiers de recherche 1303, CIRPEE.
    10. Rochelle Beukes & Ada Jansen & Mariana Moses & Derek Yu, 2017. "Exploring the Eligibility Criteria of the Child Support Grant and its Impact on Poverty," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(2), pages 511-529, November.
    11. Dorrit Posel & Michael Rogan, 2014. "Measured as Poor Versus Feeling Poor: Comparing Objective and Subjective Poverty Rates in South Africa," WIDER Working Paper Series wp-2014-133, World Institute for Development Economic Research (UNU-WIDER).
    12. Jude Okechukwu Chukwu, 2020. "New Estimates of Non-inclusiveness of Growth Using Two Nigerian Household Survey Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(1), pages 191-204, November.
    13. Ivan Turok & Joshua Budlender & Justin Visagie, 2018. "Urban “slums” and social mobility," Development Policy Review, Overseas Development Institute, vol. 36(6), pages 703-725, October.
    14. Jude Okechukwu Chukwu, 2017. "Estimating Inequality Semi-elasticity of Poverty Reduction in Nigeria," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 1087-1101, April.

    More about this item

    Keywords

    Welfare and Poverty; Government Policy; Provision and Effects of Welfare Programmes; Measurement and Analysis of Poverty; Inequality;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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