Working Paper Series, Department of Economics, Uppsala University
No 2010:4:
The marginal propensity to earn, consume and save out of unearned income in South Africa
Niklas Bengtsson ()
Abstract: We use a rapid introduction of an unconditional cash grant
(child support) in South Africa to estimate the marginal propensity to
consume and earn out of a permanent change in unearned income. We find that
the marginal propensity to earn is about to -0.25 for single-adult
households, and somewhat lower for households with more than one adult. A
very small fraction of the grant is saved. All in all, the marginal
propensities estimated here are all similar to those reported in comparable
papers using US data. However, they stand in contrast to some results on
conditional cash transfers in other developing countries.
Keywords: Social policy; Poverty reduction; Labor Supply; Earnings; Savings; Expenditure; Stone-Geary utility; (follow links to similar papers)
JEL-Codes: H31; J22; O23; (follow links to similar papers)
34 pages, March 24, 2010
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