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Trends in poverty and inequality since the political transition

Author

Listed:
  • 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.

Suggested Citation

  • Servaas van der Berg & Ronelle Burger & Rulof Burger & Megan Louw & Derek Yu, 2005. "Trends in poverty and inequality since the political transition," Working Papers 01/2005, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers12
    as

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    References listed on IDEAS

    as
    1. Angus Deaton, 2005. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 1-19, February.
    2. 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.
    3. 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.
    4. Xavier Sala-i-Martin, 2002. "The World Distribution of Income (estimated from Individual Country Distributions)," NBER Working Papers 8933, National Bureau of Economic Research, Inc.
    5. 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.
    6. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    poverty; inequality; South Africa; employment;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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