Can cash transfers aid labour market recovery? - Evidence from South Africa’s special COVID-19 grant - DPRU Working Paper 202108

Analysis using pre-crisis survey data suggested that in the absence of such targeted interventions, the extreme poverty rate amongst vulnerable households may have almost tripled.4 The realised expansion of social assistance took the form of top-ups to the amounts of every existing social grant as well as the introduction of the special COVID-19 grant for an initial period of six months. [...] Progressivity of the COVID-19 grant Before analysing the distribution of the COVID-19 grant amongst individuals of varying levels of household income, we first briefly examine the adequacy of the grant relative to other existing grants – the CSG and OPG. [...] The sample sizes of the relevant treatment and control groups for the PSM-DiD models are presented in Table 7, which expectedly shows two notable characteristics of the data: (i) the magnitude of the treatment group is considerably smaller in the pre-law period relative to the post- law period (despite the reduction of the QLFS sample from 2020Q2 onwards), and (ii) the matching approach results in. [...] [4] The coefficients represent the change in outcomes for grant recipients relative to non-recipients in the five quarters before and three quarters after the introduction of the grant, as compared to the quarter immediately prior to the introduction. [...] Depending on the fiscus and the trajectory of the pandemic and the labour market, policymakers ought to consider further extending the availability of the COVID-19 grant in the short- or long-term.