Fiscal policy and dimensions of inequality in South Africa: A time‐varying coefficient approach

Jeanne Terblanche, Dawie van Lill and Hylton Hollander

South African Journal of Economics, 2024, vol. 92, issue 1, 105-119

Abstract: South Africa continues to face high inequality levels despite its progressive tax and extensive social protection systems. We compare the dynamic impact of fiscal policy on the distribution of incomes, wages and wealth in South Africa from 1993 to 2019. For this purpose, we use a time‐varying parameter vector autoregression to estimate the impact of direct tax revenue and total transfer spending on three distinct inequality datasets. The analysis of various dimensions of inequality is the main contribution of the paper as the literature typically focuses on income inequality. A second contribution lies in the incorporation of time‐varying effects, which enables the analysis of the changing relationship between fiscal policy and inequality. The results suggest that this relationship is indeed time‐varying and that the impact of direct taxes and transfers differs markedly across the inequality dimensions, both in terms of magnitude and sign. Overall, we find that both transfers and direct taxes have not significantly reduced income, wage or wealth inequality in South Africa.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/saje.12369

Related works:
Working Paper: Fiscal policy and dimensions of inequality in South Africa: A time-varying coefficient approach (2023)
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:bla:sajeco:v:92:y:2024:i:1:p:105-119

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0038-2280

Access Statistics for this article

South African Journal of Economics is currently edited by Philip A. Black

More articles in South African Journal of Economics from Economic Society of South Africa Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().