Journal of African Economies Advance Access originally published online on September 27, 2007
Journal of African Economies 2007 16(5):782-812; doi:10.1093/jae/ejm015
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Poverty and Inequality in the First Decade of South Africa's Democracy: What can be Learnt from Panel Data from KwaZulu-Natal?
1 Department of Economics, University of California, Riverside, 4108, Sproul Hall, Riverside, CA 92521, USA
2 Department of Agricultural and Applied Economics, University of Wisconsin, Madison, 421 Taylor Hall, 427 Lorch Street, Maddison, WI 53706, USA
3 School of Development Studies, University of KwaZulu-Natal, Memorial Tower Building, King George V Ave, Durban, South Africa
* Corresponding author: Julian May, School of Development Studies, University of KwaZulu-Natal, Memorial Tower Building, King George V Aue, Durban, South Africa. Telephone: +27 31 2602841. E-mail: mayj{at}ukzn.ac.za
Despite striking indicators depicting high per capita Gross Domestic Product together with poor social indicators, changes in the incidence and severity of money-metric poverty in South Africa since 1993 have been a source of debate. Household surveys suggest that poverty appears to have persisted during the 1990s, with perhaps some improvement since 2000. Inequality remains high, and is probably widening, but there has been delivery in terms of social services such as water and electricity. Panel data that track the circumstances of the same people contribute towards a deeper understanding of the complex story of poverty and inequality in South Africa. Data from the KwaZulu-Natal Income Dynamics Study (KIDS) collected between 1993 and 2004 show increasing poverty and inequality in the mid-1990s, with a partial reversal of some of these trends in the post-1998 period. The improved well-being of at least some next-generation households is a hopeful sign in these data. In addition, government transfers do seem to have contributed towards dampening the impact of market-generated inequality, reducing the spread of the expenditure distribution and lifting up the very lowest part of the distribution. In particular, the introduction of the Child Support Grant has dramatically increased the number of recipients of grants. This is reflected in the KIDS data, which show that the amount of transfers per-household has doubled.
JEL classification: I32, D63, J62, C23, N37
An earlier version of this paper was presented to ‘South African Economic Policy under Democracy: A Ten Year Review’ held at Mostertsdrift in Stellenbosch, 28 October 2005. Useful comments received from Murray Leibbrandt and Geeta Kingdon, and three anonymous referees, are gratefully acknowledged and the usual disclaimers apply. The data set reported here is an outcome of a collaborative project among researchers at the University of KwaZulu-Natal, the University of Wisconsin-Madison, the London School of Hygiene & Tropical Medicine, the Norwegian Institute of Urban and Regional Studies, the International Food Policy Research Institute (IFPRI) and the South African Department of Social Development. In addition to these institutions, financial support was provided by the Department for International Development-South Africa (DFID-SA), the United States Agency for International Development under agreement No. LAG-A-00-96-90016-00 through the BASIS Collaborative Research Support Program, the Mellon Foundation and a National Research Foundation/Norwegian Research Council grant to the University of KwaZulu-Natal.