Intergenerational Transfers and the Expansion of the South African Welfare State, 1995-2005

One of the defining features of the South African socioeconomic milieu is the stark inequalities that exist across, for example, race, gender, and location. Paired with this, high unemployment means that poverty is rife. In addressing the challenges of poverty and inequality, South Africa’s post-apartheid governments have expanded the social welfare system, while prioritising expenditure on education, healthcare and housing. The effect has been a rapid increase in resource flows from government to households: growth in social spending in the first decade of democracy outstripped growth in general government expenditure and, by 2011, 30 percent of the country’s population was in receipt of a welfare grant.

Using the National Transfer Account (NTA) methodology pioneered by Lee and Mason, this paper investigates the impact that this policy change has had on intergenerational transfers between 1995 and 2005. Building on earlier work that has estimated South Africa’s first set of accounts (for 2005), the paper analyses the changes in private consumption and private transfers in response to this growth in public consumption and public transfers. With public transfers to both young and old increasing over time, the paper will investigate the changing patterns of net public (and private) transfers across age cohorts.