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IDRC logoFunding: International Development Research Centre (IDRC)

SALDRU peopleMurray LeibbrandtCally ArdingtonNicola BransonIngrid Woolard

 

Objectives

South Africa has put in place an extensive system of social grants over the post-apartheid years, placing it near the top of international rankings in terms spending on social assistance in relation to GDP. In South Africa it is well known that these grants have large direct impacts on poverty alleviation. However, there is loud speculation in both public and policy circles about South Africa’s "culture of dependency" and the disincentive effects of social grants. Indeed little is known about whether each rand of social grant receipt generates more than immediate income relief. Specifically, do these income flows help vulnerable individuals and households successfully integrate into the labour market so that the poverty trap is broken?

This project sought to answer this question by interrogating longitudinal (panel) data that have been gathered over the last decade to assess the impact of social grants on labour market behavior. Given South Africa’s unemployment crisis and the particular burden that youth face in this crisis, we focused on the role of social grants in facilitating access of young South Africans to employment. This had not been explicitly addressed up to now and our data were uniquely able to do this.

 

Activities

• We estimated the impact of social grants and the baseline human capital of youth, on the probability of finding work. Does access to resources such as the old-age pension affect the intensity of job search of young South Africans? A negative labour supply effect is possible but it is also possible that social grants facilitate job search by financing costly search activities. It is crucial that this debate is informed by careful analysis of the evidence. 

• Using two waves of data from the National Income Dynamics Study (NIDS) we followed up on some preliminary evidence in the literature that indicates that social grants impact household composition. Particularly important from the poverty point of view was the question of whether social grants relieve a financial constraint that is preventing migration out of rural areas in search of work.

• Relatedly, using rich data on actual and expected intergenerational transfers in the Cape Area Panel Study (CAPS), we analysed the extent to which a “family tax” on earnings may reduce the incentive for young people to find work. Is job search affected by the number of household and family members the young adult may be expected to support once she is employed? In addition, we estimated the extent to which finding a job leads to a change in resource flows to and from older family members.

• Preliminary evidence suggested important gender differences to all of these responses. By paying detailed attention to who is getting grants, who is looking for work, who is getting employment and of what sort, who is migrating and who is staying out of the labour market, we were able to tease out gender differences within a framework of nuanced household adjustments.

 

SALDRU Working Papers

Credit constraints and the racial gap in post-secondary education in South Africa

Cally Ardington, Nicola Branson, David Lam, Murray Leibbrandt (October 2013).

The influence of social transfers on labour supply: A South African and international review

Murray Leibbrandt, Kezia Lilenstein, Callie Schenker and Ingrid Woolard (October 2013).

Changes in education, employment and earnings in South Africa - A cohort analysis

Nicola Branson, Cally Ardington, David Lam and Murray Leibbrandt (August 2013).

Moving out and moving in: Evidence of short-term household change in South Africa from the National Income Dynamics Study

Lloyd Grieger, April Williamson, Murray Leibbrandt and Jim Levinsohn (August 2013).

Social protection and labour market outcomes in South Africa

Cally Ardington, Till Bärnighausen, Anne Case and Alicia Menendez (June 2013).

 

Briefs and Presentations 

More financial aid is not the best way to close the racial gap in tertiary education

David Lam, Cally Ardington, Nicola Branson and Murray Leibbrandt (June 2014). This also appeared on Polity.org.za

pdf Youth unemployment and social protection (565 KB)

Cally Ardington et al. SALDRU Research Brief (December 2013).

pdf Moving out and moving in: Evidence of short-term household change in South Africa from the National Income Dynamics Study (540 KB)

Lloyd Grieger, April Williamson, Murray Leibbrandt and James Levinsohn. SALDRU Research Brief (November 2013). 

pdf The middle class and inequality in South Africa (445 KB)

Arden Finn, Murray Leibbrandt and Ingrid Woolard. SALDRU Research Brief (November 2013).

pdf What happened to multidimensional poverty in South Africa between 1993 and 2010? (632 KB)

Arden Finn, Murray Leibbrandt and Ingrid Woolard. SALDRU Research Brief (November 2013).

The matric certificate is still valuable in the labour market

Clare Hofmeyr, Nicola Branson, Cally Ardington, David Lam and Murray Leibbrandt. Econ3x3 brief (October 2013). 

Confronting youth unemployment: A South African perspective 

Ingrid Woolard. IZA Conference, New Delhi (November 2012). 

Social protection in west Africa: The status quo, lessons from other regions, implications for research

John Hoddinott, Stephen Devereux, Philip White, Stephan Klasen, Ingrid Woolard, Harold Alderman, Ousmane Badiane, John Ulimwengu and Fleur Wouterse. IFPRI Thematic Research Note (October 2012).

 

In the media 

Findings indicate need to propel people to obtain matric

Sunday Independent (June 2014).

Having a matric helps you get ahead

IOL News (March 2014).

Rethinking the household: the impacts of transfers

Markus Goldstein, World Bank Blogs - Development Impact (February 2014).

audio Value of the matric certificate in the job market (4.36 MB)

Clare Hofmeyr, 567 Cape Talk interview with Africa Melane (October 2013).

Grants encourage liberation, not dependence

Johnny Steinberg, BD Live Opinion and Analysis Column (August 2013).

Targeting youth to reduce South Africa's unemployment

Ingrid Woolard, Jobs and Development blog (June 2013). 

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