Policy brief, number 9, 2014

Abstract

[From Introduction] In South Africa, social grants are a central component of government's efforts to alleviate poverty. The number of people receiving social grants has significantly increased in recent years (from about 10.9 million in 2005 to almost 15.7 million in 2013, and an anticipated 16.8 million recipients by 2015).With social grants playing an increasingly important role, a pressing policy issue is whether or not the current social grant schemes are an effective tool for alleviating poverty. Some studies have shown that social grants improve food security (Case and Deaton, 1998; Samson et al., 2008) and in the long run can promote employment through accumulation of human capital and enhancing productivity of poor households (Edmonds et al., 2006; Samson et al., 2008; Surender et al., 2007). However, other studies have reported that social grants have possible disincentive effects on labor market activity, for example, through the relaxing of household budget constraints which may lead to a reduction in labor supply (Bertrand et al., 2003; Ranchorhod, 2006; Klasen and Woolard, 2009). Our study provides new insights by highlighting two key household characteristics, gender and education, in catalyzing or diminishing the effects of grants on household livelihood outcomes. Our analysis mainly focuses on impacts of pensions on household food security and labor supply of household members