IDEAS home Printed from https://ideas.repec.org/p/sza/wpaper/wpapers87.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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.

Suggested Citation

  • 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.
  • Handle: RePEc:sza:wpaper:wpapers87
    as

    Download full text from publisher

    File URL: https://www.ekon.sun.ac.za/wpapers/2009/wp152009/wp-15-2009.pdf
    File Function: First version, 2009
    Download Restriction: no

    References listed on IDEAS

    as
    1. Milanovic, Branko & Lindert, Peter & Williamson, Jeffrey, 2007. "Measuring Ancient Inequality," MPRA Paper 5388, University Library of Munich, Germany.
    2. Feinstein, Charles, 1988. "The Rise and Fall of the Williamson Curve," The Journal of Economic History, Cambridge University Press, vol. 48(03), pages 699-729, September.
    3. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521616416, March.
    4. Jane Fry & Tim Fry & Keith McLaren, 2000. "Compositional data analysis and zeros in micro data," Applied Economics, Taylor & Francis Journals, vol. 32(8), pages 953-959.
    5. Morrisson, Christian, 2000. "Historical perspectives on income distribution: The case of Europe," Handbook of Income Distribution,in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 4, pages 217-260 Elsevier.
    6. Chen, Chau-Nan & Tsaur, Tien-Wang & Rhai, Tong-Shieng, 1982. "The Gini Coefficient and Negative Income," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 473-478, November.
    7. Keen, Michael, 1986. "Zero Expenditures and the Estimation of Engel Curves," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(3), pages 277-286, July.
    8. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521850919, March.
    9. Ewout Frankema, 2010. "The colonial roots of land inequality: geography, factor endowments, or institutions?," Economic History Review, Economic History Society, vol. 63(2), pages 418-451, May.
    10. Willem Boshoff & Johan Fourie, 2008. "Explaining ship traffic fluctuations in the early Cape settlement: 1652–1793," Working Papers 01/2008, Stellenbosch University, Department of Economics.
    11. Champernowne, D G, 1974. "A Comparison of Measures of Inequality of Income Distribution," Economic Journal, Royal Economic Society, vol. 84(336), pages 787-816, December.
    12. Boshoff, Willem H. & Fourie, Johan, 2010. "The significance of the Cape trade route to economic activity in the Cape Colony: a medium-term business cycle analysis," European Review of Economic History, Cambridge University Press, vol. 14(03), pages 469-503, December.
    13. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, pages 247-258.
    14. David McKenzie, 2005. "Measuring inequality with asset indicators," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(2), pages 229-260, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.
    2. Ivan Turok & Josh Budlender & Justin Visagie, 2017. "The Role of Informal Urban Settlements in Upward Mobility," Working Papers 201701, University of Cape Town, Development Policy Research Unit.
    3. Posel, Dorrit & Rogan, Michael, 2014. "Measured as poor versus feeling poor: Comparing objective and subjective poverty rates in South Africa," WIDER Working Paper Series 133, World Institute for Development Economic Research (UNU-WIDER).
    4. repec:spr:soinre:v:134:y:2017:i:2:d:10.1007_s11205-016-1433-z is not listed on IDEAS
    5. Jude Okechukwu Chukwu, 2017. "Estimating Inequality Semi-elasticity of Poverty Reduction in Nigeria," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 1087-1101, April.

    More about this item

    Keywords

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

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sza:wpaper:wpapers87. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Melt van Schoor) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/desunza.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.