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The Policies for Reducing Income Inequality and Poverty in South Africa

Author

Listed:
  • Murray Leibbrandt

    () (SALDRU, School of Economics, University of Cape Town)

  • Eva Wegner

    () (SALDRU, School of Economics, University of Cape Town)

  • Arden Finn

    (NIDS-SALDRU, School of Economics, University of Cape Town)

Abstract

Trends in inequality, poverty, and redistribution in post-apartheid South Africa have received intense attention especially in terms of measuring inequality and poverty levels and the proximate causes of these levels. We review this literature and find a set of established trends. Inequality levels have increased but the face of inequality has changed with present-day inequality displaying a lessened racial make-up than under apartheid. In contrast, poverty has decreased but is still bears the strong racial makers of apartheid. The labour market continues to drive inequality. A related literature has concentrated on fiscal redistribution in South Africa after the transition, arguing that social policies are well targeted towards the poor with social grants being central in lifting people out of poverty. At the same time, these policies have not succeeded in reversing inequality trends and in providing equal opportunities for all South Africans. To bulk of paper probes this further. We use fiscal incidence analysis to show that redistribution increased slightly since 1993, that this redistribution is higher than in Latin America but far below European levels. Second, looking at spending for all social services we find a mixed picture. There has been an increase in spending since the end of apartheid on social policy and for a number of social policy items in the progressivity of this spending. At the same time, spending has not increased as a percentage of GDP and has become less progressive for social grants. Finally, we examine education policy in more detail. We find that the importance of tertiary education, as a predictor of income has increased considerably whereas individuals with low or incomplete secondary education were worse off in 2008, compared to 1993. Second, we find that state spending on education has increased since the early 1990s. The spending gap between rich and poor provinces has become much narrower but spending equality has not been reached. The academic achievements of students display high inequality, compared to international standards and there is also evidence that the capabilities of students have decreased, rather than increased, suggesting that increased spending has not translated into an increase in the quality of education provision.

Suggested Citation

  • Murray Leibbrandt & Eva Wegner & Arden Finn, 2011. "The Policies for Reducing Income Inequality and Poverty in South Africa," SALDRU Working Papers 64, Southern Africa Labour and Development Research Unit, University of Cape Town.
  • Handle: RePEc:ldr:wpaper:64
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    Cited by:

    1. Miquel Pellicer & Patrizio Piraino & Eva Wegner, 2014. "Information, mobilization, and demand for redistribution: A survey experiment in South Africa," SALDRU Working Papers 139, Southern Africa Labour and Development Research Unit, University of Cape Town.
    2. d'Agostino, Giorgio & Scarlato, Margherita & Napolitano, Silvia, 2016. "Do Cash Transfers Promote Food Security? The Case of the South African Child Support Grant," MPRA Paper 69177, University Library of Munich, Germany.
    3. Nicholas Spaull, 2012. "Poverty & Privilege: Primary School Inequality in South Africa," Working Papers 13/2012, Stellenbosch University, Department of Economics.
    4. Johan Fourie, 2016. "The long walk to economic freedom after apartheid, and the road ahead," Working Papers 11/2016, Stellenbosch University, Department of Economics.
    5. Benjamin Roberts, 2014. "Your Place or Mine? Beliefs About Inequality and Redress Preferences in South Africa," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(3), pages 1167-1190, September.

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