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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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inter generational transfer of household poverty in kwazulu natal evidence from kids 1993 2004

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
Outline of paper
  • Literature review
  • Data
  • Methods
  • Results
  • Conclusion and policy recommendations
background literature
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

aims of the study
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?
slide5
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.
method
Method
  • Divided 2004 data between “core” & “dynasty” households
    • Where dynasty households represent the split-off “next generation” & ”foster” households of the core households
method continue
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
method continue1
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
household level of poverty
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 level of significance 5 level of significance 1 level of significance2
* 10% level of significance; **5% level of significance; *** 1% level of significance

Regression Results – Pooled models

conclusion policy recommendations
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.
further research
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.