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Antonie Pool University of the Free State TIPS Conference, Cape Town October 2008

Inter-Generational Transfer of Household Poverty in KwaZulu Natal: Evidence from KIDS (1993 – 2004). Antonie Pool University of the Free State TIPS Conference, Cape Town October 2008. Outline of paper. Literature review Data Methods Results Conclusion and policy recommendations.

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Antonie Pool University of the Free State TIPS Conference, Cape Town October 2008

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  1. Inter-Generational Transfer of Household Poverty in KwaZulu Natal: Evidence from KIDS (1993 – 2004) Antonie Pool University of the Free State TIPS Conference, Cape Town October 2008

  2. Outline of paper • Literature review • Data • Methods • Results • Conclusion and policy recommendations

  3. Background & Literature Poverty alleviation is focus of many policy frameworks (MDG’s, ASGISA) MDG’s  ½ poverty by 2015 ASGISA  ½ poverty by 2014 56% of Africans & 15% of Indians still live in poverty (UNDP, 2004) Poverty = when a person/household cannot attain a reasonable minimum level of economic wellbeing (Ravallion, 1994). Require knowledge of poverty determinants to achieve goal of halving poverty by 2014 Problem is the existence of poverty traps  60% of SA’s poor households are caught in a structural poverty trap (Carter & May, 2001)  Inter-generational-transfer of poverty also a poverty trap

  4. Aims of the study • What determines the poverty status of a Dynasty household? • What influence does the background (transitions) of a household have on the probability to be poor? (IGT poverty) • What can be done to ensure the goal of halving poverty by 2014 is reached – given the regression results?

  5. Data • Kwa-Zulu Natal Income Dynamics Study (KIDS) data Longitudinal survey following a random sample of individuals who lived in KZN in 1993. • Survey done in 3 waves • 1993 , 1998, 2004 • In 1998 & 2004, only re-interviewed Africans & Indians • 2004  Due to aging & effect of HIV/AIDS  • Include Next Generation & Foster households • Study focuses on all these wave  To look at the determinants of poverty in Dynasty households and the role of Core characteristics.

  6. Method • Divided 2004 data between “core” & “dynasty” households • Where dynasty households represent the split-off “next generation” & ”foster” households of the core households

  7. Method - continue • Income Poverty  All those households that fall below the pre-defined poverty line • Poverty line = R250 p/person per month (2000 prices) (Van der Berg & Louw, 2004) • Used CPI to inflate poverty line to 1993, 1998 & 2004 value • Used adult equivalent household sizes • Compared household poverty line based on household expenditure

  8. Method - continue • Regression analyses  Firstly used Panel data to determine dynamic variables, followed by a cross sectional Probit model estimation • Indicate the effect of each independent variable on the probability that a Dynasty household is poor (HHSize = 0.05  For every 1 additional member in the hh, the probability to be poor increases by 5%) • This identify the distinction of core dynamics versus dynasty characteristics as the main determinants of poverty

  9. Household level of poverty Difference between 2004 dynasty- & 1993 core households significant at 10% level of significance. Differences between 2004 dynasty- & both the 1998 & 2004 core households significant at 1% level of significance.

  10. Levels of education (1993Core & 2004 Dynasty)

  11. Poverty status of core households (1993-2004)

  12. Regression Analyses - The model

  13. Regression Results – Dynasty Characteristics *10% level of significance; **5% level of significance; *** 1% level of significance

  14. Regression Results – Core Characteristics * 10% level of significance; **5% level of significance; *** 1% level of significance

  15. * 10% level of significance; **5% level of significance; *** 1% level of significance Regression Results – Pooled models

  16. Regression Results – Intergenerational Transfer of Poverty (ITP) * 10% level of significance; **5% level of significance; *** 1% level of significance

  17. Regression Results – Intergenerational Transfer of Poverty (ITP) * 10% level of significance; **5% level of significance; *** 1% level of significance

  18. Conclusion & Policy recommendations • Household size and the number of dependants in a household have an influence on the probability that a household will be poor. • Surprisingly, employment income has only a small impact on the probability that a household will be poor (Remittance income influence larger) (Maybe due to educational and unemployment profile of group) • Background & change over time (especially in the level of education) play a determinant role in the poverty status of a household • Most important determinant of household poverty is inter-generationally transferred – poverty trap that needs ultimate attention • Those households exposed to IGT poverty – Long-term problem. In these cases, the most important focus must be on education.

  19. Further research: • Interact core/dynasty characteristics to explain why dynasty/core households escaped poverty or not? • The role of migration and net-remittances in poverty.

  20. Thank You

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