Welfare Shifts in the Post-Apartheid South Africa: A Comprehensive Measurement of Changes

Abstract: The objective of this study is to provide a comprehensive measure of shifts in welfare in post-apartheid South Africa by examining changes in both income and non-income welfare between 1993 and 2005. Previous research using expenditure or consumption-based measures of income has shown that, depending on the data sources, household income poverty in South Africa either remained static or increased slightly between 1995 and 2000 or between 1996 and 2001. Research considering the changes in non-income welfare in the post-apartheid South Africa has found significant increases in the levels of non-income welfare, driven to a large extend by the increased delivery of basic services by government since 1994. Using factor analysis, we construct a comprehensive household welfare index that includes public assets (government provided services), private assets (including education) and wage and grant income. In addition, a public asset index and a private asset index are constructed that allow us to analyse welfare as captured by access to government provided services and privately owned assets respectively. Given the availability of data for 1999 we are able to provide mid-period estimates for all three indices. When standard poverty measures are applied to our derived indices, we find that total household welfare increased between 1993 and 2005. We also find that total welfare increased at a faster pace between 1993 and 1999 than between 1999 and 2005. The evidence suggests that in the first period the increase was driven largely by increased government service delivery, while in the second period it was driven by the growth in private asset ownership.