Resource Inflows and Household Composition: Evidence from South African Panel Data

Abstract

Economic analysis of household behaviour, usually, assumes that household size and composition are fixed and exogenous. This study departs from this practice by analysing resource and household compositional variables, using an interdependent framework that treats them as jointly endogenous. The study is conducted using panel data set of Black households residing in Kwazulu Natal province in South Africa. The results provide evidence of fluidity of household structure, and point to new hypotheses on its responsiveness to changes in resources and other variables. The results also point to some sharp changes in South Africa between 1993 and 1998 in the direction and magnitude of the impact of several key variables.

Keywords: Private Transfers, Social Pensions, Household Structure, Panel Data, Crowding Out

JEL Classification: C32, D12, I32, I38