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

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Author Info

  • 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.

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File URL: http://www.ekon.sun.ac.za/wpapers/2009/wp152009/wp-15-2009.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 15/2009.

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Date of creation: 2009
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Handle: RePEc:sza:wpaper:wpapers87

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Related research

Keywords: Welfare and Poverty; Government Policy; Provision and Effects of Welfare Programmes; Measurement and Analysis of Poverty; Inequality;

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Cited by:
  1. 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.

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