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Trends in poverty and inequality since the political transition

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  • Servaas van der Berg

    ()
    (Department of Economics, Stellenbosch University)

  • Ronelle Burger

    ()
    (Department of Economics, Stellenbosch University)

  • Rulof Burger

    ()
    (Department of Economics, Stellenbosch University)

  • Megan Louw

    ()
    (Department of Economics, Stellenbosch University)

  • Derek Yu

    ()
    (Department of Economics, Stellenbosch University)

Abstract

Using a constructed data series and another data series based on AMPS (the All Media and Products Survey), this paper explores trends in poverty and income distribution over the post-transition period. To steer clear of an unduly optimistic conclusion, assumptions are chosen that would tend to show the least decline in poverty. Whilst there were no strong trends in poverty for the period 1995 to 2000, both data series show a considerable decline in poverty after 2000, particularly in the period 2002-2004. Poverty dominance testing shows that this decline is independent of the poverty line chosen or whether the poverty headcount, the poverty ratio or the poverty severity ratio are used as measure. We find likely explanations for this strong and robust decline in poverty in the massive expansion of the social grant system as well as possibly in improved job creation in recent years. Whilst the collective income of the poor (using our definition of poverty) was only R27 billion in 2000, the grants (in constant 2000 Rand values) have expanded by R22 billion since. Even if the grants were not well targeted at the poor (and in the past they have been), a large proportion of this spending must have reached the poor, thus leaving little doubt that poverty must have declined substantially. However, there are limits to the expansion of the grant system as a means of poverty alleviation, pointing to the importance of economic growth with job creation for sustaining the decline in poverty.

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File URL: http://www.ekon.sun.ac.za/wpapers/2005/wp012005/wp-01-2005.pdf
File Function: First version, 2005
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Bibliographic Info

Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 01/2005.

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Date of creation: 2005
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Handle: RePEc:sza:wpaper:wpapers12

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Keywords: poverty; inequality; South Africa; employment;

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  1. Xavier Sala-i-Martin, 2002. "The world distribution of income (estimated from individual country distributions)," Discussion Papers 0102-58, Columbia University, Department of Economics.
  2. Angus Deaton, 2004. "Measuring poverty in a growing world (or measuring growth in a poor world)," Working Papers 178, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  3. Murray Leibbrandt & Haroon Bhorat, 1999. "Correlates of Vulnerability in the South African Labour Market," Working Papers 99027, University of Cape Town, Development Policy Research Unit.
  4. Cally Ardington & David Lam & Murray Leibbrandt & Matthew Welch, 2005. "The Sensitivity of Estimates of Post-Apartheid Changes in South African Poverty and Inequality to key Data Imputations," SALDRU/CSSR Working Papers 106, Southern Africa Labour and Development Research Unit, University of Cape Town.
  5. Case, Anne & Deaton, Angus, 1998. "Large Cash Transfers to the Elderly in South Africa," Economic Journal, Royal Economic Society, vol. 108(450), pages 1330-61, September.
  6. Haroon Bhorat, 2004. "Labour Market Challenges In The Post-Apartheid South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 72(5), pages 940-977, December.
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