Presenter:  George Mutasa.

Title:  Disability Grant and Individual Labour Supply: Evidence From South Africa

Abstract

Despite the explosive growth in the number of people receiving disability benefits in South Africa, and concurrent low labour force participation rates observed among recipients, empirical evidence on the behavioural effects of such benefits is unexpectedly scant. This study aims at estimating the impact of the Disability Grant Programme (DGP) on labour force participation taking into account the potential bias due to the existence of unobserved confounding factors. We use data from the 2007 wave of the General Household Survey (GHS) and implement a three-step methodology in a comparative perspective to deal with the potential selection bias. We first implement an ordinary least squares regression followed by an instrumental variable regression to correct for possible endogeneity of DG take up. Finally, we check the sensitivity and robustness of the results by implementing a variety of propensity score matching techniques. The results overall suggest that the DGP has work disincentive effects, but the magnitude differs between parametric and non-parametric estimators.