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The Economy-wide Impacts of the South African Child Support Grant: a Micro-Simulation-Computable General Equilibrium Analysis

Author

Listed:
  • Luca Tiberti
  • Hélène Maisonnave
  • Margaret Chitiga
  • Ramos Mabugu
  • Véronique Robichaud
  • Stewart Ngandu

Abstract

We examine the economy-wide impact of the child support grant (CSG) on the South African economy using a bottom-up/top-down approach. This allows us to estimate the potential effects on households’ welfare and on the economy following a change in the CSG. Three simulations are presented, in simulation 1 the value of the CSG is increased by 20%; in simulation 2 the number of beneficiaries among the eligible children is increased by two million and simulation 3 combines these two. A positive link between the CSG and the probability of participating in the labour market is found. The positive impacts on the labour market, together with the increase in the transfers received by households, results in an increase in their income. Poverty decreases in comparison with the base year for the whole population and for children. Finally, we can conclude that simulation 1 is the most cost effective of the policies.

Suggested Citation

  • 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.
  • Handle: RePEc:lvl:lacicr:1303
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    References listed on IDEAS

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    1. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 1-25, June.
    2. Victoria Hosegood & Anne Case & Cally Ardington, 2009. "Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 22-48, January.
    3. Jorge M. Aguero & Michael R. Carter & Ingrid Woolard, 2006. "The Impact of Unconditional Cash Transfers on Nutrition: The South African Child Support Grant," SALDRU Working Papers 8, Southern Africa Labour and Development Research Unit, University of Cape Town.
    4. 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.
    5. Marianne Bertrand & Sendhil Mullainathan & Douglas Miller, 2003. "Public Policy and Extended Families: Evidence from Pensions in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 27-50, June.
    6. 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.
    7. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications, The World Bank, number 2597.
    8. Katherine Eyal & Ingrid Woolard, 2011. "Throwing the Book at the CSG," SALDRU Working Papers 53, Southern Africa Labour and Development Research Unit, University of Cape Town.
    9. Servaas van der Berg & Krige Siebrits, 2010. "Social assistance reform during a period of fiscal stress," Working Papers 17/2010, Stellenbosch University, Department of Economics.
    10. Servaas van der Berg & Megan Louw & Leon du Toit, 2009. "Poverty trends since the transition: What we know," Working Papers 19/2009, Stellenbosch University, Department of Economics.
    11. Paula Armstrong & Bongisa Lekezwa & Krige Siebrits, 2008. "Poverty in South Africa: A profile based on recent household surveys," Working Papers 04/2008, Stellenbosch University, Department of Economics.
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    More about this item

    Keywords

    Child support grant; computable general equilibrium; micro-simulation; poverty; South Africa;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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