Trends in Poverty and Inequality Since the Political Transition

DPRU Working Paper 06/104

49 Pages Posted: 24 Apr 2007

See all articles by Servaas van der Berg

Servaas van der Berg

Stellenbosch University

Ronelle Burger

Stellenbosch University

Rulof Burger

Stellenbosch University

Megan Louw

Stellenbosch University

Derek Yu

Stellenbosch University

Date Written: March 2006

Abstract

Using a constructed data series and another data series based on the All Media and Products surveys (AMPS), this paper explores trends in poverty and income distribution over the post-transition period. To steer clear of an unduly optimistic conclusion, assumptions are chosen that would tend to show the least decline in poverty. Whilst there were no strong trends in poverty for the period 1995 to 2000, both data series show a considerable decline in poverty after 2000, particularly in the period 2002-2004. Poverty dominance testing shows that this decline is independent of the poverty line chosen or whether the poverty headcount, the poverty ratio or the poverty severity ratio are used as measure. We find likely explanations for this strong and robust decline in poverty in the massive expansion of the social grant system as well as possibly in improved job creation in recent years. Whilst the collective income of the poor (using our definition of poverty) was only R27 billion in 2000, the grants (in constant 2000 Rand values) have expanded by R22 billion since. Even if the grants were not well targeted at the poor (and in the past they have been), a large proportion of this spending must have reached the poor, thus leaving little doubt that poverty must have declined substantially.

Keywords: All Media and Products surveys, poverty ratio, poverty severity ratio, social grant system

JEL Classification: A1

Suggested Citation

Van der Berg, Servaas and Burger, Ronelle and Burger, Rulof and Louw, Megan and Yu, Derek, Trends in Poverty and Inequality Since the Political Transition (March 2006). DPRU Working Paper 06/104 . Available at SSRN: https://ssrn.com/abstract=982093 or http://dx.doi.org/10.2139/ssrn.982093

Servaas Van der Berg (Contact Author)

Stellenbosch University ( email )

Private Bag X1
Stellenbosch, Western Cape 7602
South Africa

Ronelle Burger

Stellenbosch University ( email )

Private Bag X1
Matieland, 7602
South Africa

Rulof Burger

Stellenbosch University ( email )

Private Bag X1
Stellenbosch, Western Cape 7602
South Africa

Megan Louw

Stellenbosch University ( email )

Private Bag X1
Stellenbosch, Western Cape 7602
South Africa

Derek Yu

Stellenbosch University ( email )

Private Bag X1
Stellenbosch, Western Cape 7602
South Africa

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