2008 Commissioners Indaba 19 – 21 st November 2008 Sun City, North West Province Pro-Poor Economic...

2008 Commissioners Indaba

19 – 21st November 2008Sun City, North West Province

Pro-Poor Economic Growth and the Labour Market in South

Africa: Exploring the InteractionsHaroon Bhorat

Introduction

Release of New Data, Enables a 10-year Overview

2008 COMMISSIONERS INDABA 19 - 21 November 2008 Sun City

Consistent Positive Economic Growth post-1994

BUT what has the Impact been on Poverty & Inequality

Evidence from 1995 – 2000: No Major Shifts in Poverty Levels, but Increase in Inequality


Category Headcount Rate Poverty Gap Ratio

Year 1995 2005 1995 2005

R322 a month poverty line

African 63.04% 56.34% 31.86% 24.44%

Coloured 39.00% 34.19% 14.66% 12.98%

Asian 4.71% 8.43% 1.03% 2.17%

White 0.53% 0.38% 0.22% 0.11%

Total 52.54% 47.99% 26.04% 20.61%


African 38.18% 27.15% 14.71% 8.55%

Coloured 14.62% 12.30% 4.09% 3.88%

Asian 0.82% 1.60% 0.14% 1.07%

White 0.23% 0.01% 0.09% 0.00%

Total 30.92% 22.68% 11.77% 7.15%

Poverty shifts by race


Share in population & poverty

1995 2005

Population Share

R322 Poverty Line

R174 Poverty Line

Population Share

R322 Poverty Line

R174 Poverty Line

Race

African 77.28% 92.74% 95.45% 79.40% 93.22% 95.05%

Coloured 9.31% 6.92% 4.40% 8.79% 6.26% 4.77%

Asian 2.61% 0.23% 0.07% 2.48% 0.44% 0.18%

White 10.79% 0.11% 0.08% 9.23% 0.07% 0.00%


Poverty shifts by gender of household head

Category Headcount Rate Poverty Gap Ratio

Year 1995 2005 1995 2005


Male 45.83% 38.34% 22.22% 16.02%

Female 65.65% 60.57% 33.52% 26.59%

Total 52.54% 47.99% 26.04% 20.61%


Male 26.12% 17.10% 9.79% 5.38%

Female 40.31% 29.93% 15.63% 9.46%

Total 30.92% 22.68% 11.77% 7.15%


Poverty shifts without poverty lines: Cumulative distribution functions (cdf) South africa


Cumulative distribution functions (cdf) Gender of hh head


Shifts in inequality: gini coefficients

Category 1995 2005

African 0.55 0.56

Coloured 0.49 0.58

Asian 0.45 0.53

White 0.39 0.45

Total 0.64 0.69


Lorenz curves for Africans and Whites


Inequality within and between groups (using the theil index)

1995 2005

By Race

Within-group component 0.433 0.511

(53.15%) (50.35%)

Between-group component 0.381 0.504

(46.85%) (49.65%)

Total Inequality (Theil-T) 0.814 1.014

(100%) (100%)


Growth incidence curve for South Africa: 1995 - 2005

67

89

10

11

An

nual

per

cap

gro

wth

in e

xpen

ditu

re

0 20 40 60 80 100Poorest p% ranked by per cap expenditure

Growth Incidence Curve Growth rate in mean

Mean of growth rates

Source:Statistics South Africa,1995 and 2005 & own calculations

Growth Incidence Curve for South Africa: 1995-2005


Per capita grant income as share of Total wage and grant income 1999 and 2005

0

200

400

600

800

1000

1200

1400

1600

1800

1 2 3 4 5 6 7 8 9

deciles

0

10

20

30

40

50

60

70

80

90

100

mean monthly per capita grant +wage income 1999

mean monthly per capita grant + wage income 2005

share of per capita grant income in per capita grant + wage income 1999

share of per capita grant income in per capita grant + wage income 2005


Access rates of state transfers inSouth Africa, 1995 - 2005


Elasticities of poverty measures for South africa

Poverty Growth Elasticity Measure:

Poverty Inequality Elasticity:

Marginal Proportional Rate of Substitution (MPRS):

% change in poverty due to 1 % growth in pc expenditure

distribution neutral

% change in poverty due to 1 % increase in the Gini

increase in mean expenditure required to mitigate against increasing inequality (1% increase in Gini


Elasticities of poverty measures For South Africa

Category R322 Poverty Line R174 Poverty Line

Year 1995 2005 1995 2005

P1-Mean Expenditure Elasticity -1.02 -1.33 -1.63 -2.17

P1-Gini Elasticity 3.79 6.30 9.96 17.05

MPRS: P1 3.72 4.74 6.12 7.86


Datt-Ravallion Decompositions: 1995 - 2005

CategoryGrowth Component

Redistribution Component

Total Change in Poverty

Poverty Line R322 per month

Total -28.7 24.1 -4.50

African -29.7 23 -6.7

Coloured -34.6 29.8 -4.8

Asian -11.9 15.6 3.7

White -2.90 2.80 -0.20

Poverty Line R174 per month

Total -30.30 22.10 -8.20

African -32.80 21.80 -11.00

Coloured -25.80 23.50 -2.30

Asian -5.50 6.30 0.80

White -1.10 0.90 -0.20


Conclusions

Statistically significant decline in poverty: race, gender of HH head, location

Increase in inequality -> driven by inequality between race groups

Absolute pro-poor growth but not relative pro-poor growth


Conclusions

Crucial role of social grants at the bottom of the expenditure

Increase in inequality has eroded some of the poverty reduction gains of economic growth

High initial inequalities = key constraint on poverty reduction

2008 Commissioners Indaba 19 – 21 st November 2008 Sun City, North West Province Pro-Poor Economic...

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