The link between social grants and employment in South Africa

We analyse the link between means-tested social grants and employment in South Africa, where social grant expenditure is relatively large amid persistently high unemployment. Using a large panel household survey spanning a decade, we find that the recipients of both old-age and disability grants are less in employment, which is intended by the social program and consistent with the literature. However, among indirect grant recipients (those in the same households as direct grant recipients), younger members typically have lower employment prospects than other indirect recipients. There could be various explanation for this finding, including that the youth are more discouraged from seeking jobs, face larger constraints in the labour market, or have less job opportunities.