The dynamics of poverty in South Africa (updated)

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dc.contributor.author Finn, Arden
dc.contributor.author Leibbrandt, Murray
dc.date.accessioned 2016-09-15T12:57:00Z
dc.date.available 2016-09-15T12:57:00Z
dc.date.issued 2017-03
dc.identifier.citation Finn, A., Leibbrandt, M. (2017). The dynamics of poverty in South Africa. Version 2. Cape Town: SALDRU, UCT. (SALDRU Working Paper Number 174/ NIDS Discussion Paper 2016/1).
dc.identifier.isbn 978-1-928281-35-1
dc.identifier.uri http://hdl.handle.net/11090/824
dc.description.abstract We analyse the determinants of South Africans moving into and out of poverty over the first four waves of the National Income Dynamics Study (NIDS) for the years 2008 to 2014/2015. The first descriptive sections of the study focus on the balanced panel of NIDS respondents and find that a relatively high poverty exit rate was accompanied by a substantial proportion of the population being trapped in severe poverty. The roles of demographic versus income changes over time reveal that changing household composition is the largest trigger of poverty entry and exit, and that increasing income from government grants is the main trigger precipitating poverty exit for about one quarter of our sample. We then estimate an endogenous switching model that controls for initial conditions and selective attrition on the full sample of respondents in order to better understand what traps South Africans in poverty. We find that ignoring the correlations between the unobservables affecting initial conditions, sample retention and poverty transitions can lead to substantially biased results, and that there is significant genuine state dependence underlying poverty dynamics. This has important policy implications, as preventing people from falling into poverty in the first place is likely to yield greater returns that targeting the individual correlates of poverty directly. en_US
dc.description.sponsorship Arden Finn: fnnard001@myuct.ac.za Doctoral student and researcher at the Southern Africa Labour and Development Research Unit, University of Cape Town. Murray Leibbrandt: murray.leibbrandt@uct.ac.za Professor of economics and director of SALDRU at the University of Cape Town. Acknowledgements: Both authors acknowledge financial support from the Programme to Support Pro-poor Policy Development in the Department of Planning Monitoring and Evaluation. Arden Finn acknowledges the National Research Foundation for financial support for his doctoral work through the Chair in Poverty and Inequality Research. Murray Leibbrandt acknowledges the Research Chairs Initiative of the Department of Science and Technology and National Research Foundation for funding his work as the Chair in Poverty and Inequality Research. en_US
dc.language.iso en en_US
dc.relation.ispartofseries Saldru Working Paper;174
dc.subject Poverty en_US
dc.subject National Income Dynamics Study (NIDS) en_US
dc.subject South Africa en_US
dc.title The dynamics of poverty in South Africa (updated) en_US
dc.type Working Paper en_US


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