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Distributional Policies and Social Cohesion in a High-Unemployment Setting

Jorge Agüero and Eniola Fasola

No 10103, Policy Research Working Paper Series from The World Bank

Abstract: This paper studies the impact of distributional policies on social cohesion. The focus is onSouth Africa, a country with the highest unemployment rate worldwide and a major destination hub for the forciblydisplaced. The paper uses a regression discontinuity design based on the eligibility rule of an unconditional cashtransfer program (Old Age Pension) together with multiple rounds of the country’s Social Attitudes Survey andestimates the impact of the cash transfer to the local population on over 100 variables capturing differentdimensions of social cohesion, while accounting for multiple hypothesis testing. Results show a limited impact of thetransfer on social cohesion. Transfer increases life satisfaction and views favorable towards racial diversity.However, it has only a marginal effect on interpersonal trust and a very small effect on attitudes towardsimmigration. These findings are consistent with theoretical models where anti-immigrant behaviors are not the result oflow-income but rather due to non-wage factors such as ethnic background or language barriers.

Date: 2022-06-23
New Economics Papers: this item is included in nep-age, nep-mig and nep-soc
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