Asymmetric Response of Poverty to Growth and Inequality in South Africa: Implications for Current and Future Shocks

Nicholas Ngepah

Working Papers from African Economic Research Consortium

Abstract: This study investigates the effect of economic growth on poverty reduction, given inequality in South Africa. It focuses on whether the poor suffer more losses of welfare during economic recessions and depressions than they gain during expansions, and the factors that can assist the poor to stay afloat during times of economic shocks. Individuals in micro data set are matches with municipality-level data and in binary, truncated, panel, instrumental variables, and quantile regression techniques to estimate poverty and welfare effects of positive and negative economic growth rates. The study finds that, while economic growth reduces poverty, it is not enough to compensate for the poverty-raising effects of inequality. Moreover, economic decline raises poverty, but economic prosperity more than compensates by a higher magnitude. The study also reveals that, social grants and free health care and education policies have limited effects on poverty reduction during economic downturns. The findings call for policy measures that reduce inequality and promote economic growth to help cushion the poor during times of significant economic decline. Additionally, programmes that provide good education up to tertiary level and access to the labour market are crucial for sustaining poverty reduction efforts in South Africa.

Date: 2024-04-10
Note: African Economic Research Consortium
References: Add references at CitEc
Citations:

Downloads: (external link)
https://publication.aercafricalibrary.org/handle/123456789/3767 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aer:wpaper:f2fa3426-5fa8-498c-a921-edf8daa19435

Access Statistics for this paper

More papers in Working Papers from African Economic Research Consortium Contact information at EDIRC.
Bibliographic data for series maintained by Daniel Njiru ().