In South Africa, the social grant system is relatively comprehensive in scope, directly benefiting one in three individuals, and mainly empowering the most vulnerable such as children, the elderly and people with disabilities from poor households. Despite the progressiveness of this system, there remains a lack of assistance to the unemployed, who are presumed to be able to support themselves through the labor market (Ferguson, 2015). However, such a view overlooks the widespread and structural nature of unemployment in South Africa, where over 70% of the unemployed have been unemployed for more than a year. 

In this light, the expansion of the country's social grant system in response to the Covid-19 pandemic played an important role in filling this gap. On the margins of the system, a special Covid-19 grant of R350 was introduced to support this previously unreached and important group of unemployed adults. With one of the highest official unemployment rates in the world (32.6 percent in the first quarter of 2021), the grant was an important form of support for millions of vulnerable adults and was the first to use an explicit labor market eligibility criterion that could be considered a "labor market vulnerability transfer."

Find out more about the Extension in South Africa

Conducted by the UCT-DPRU team, the objective of this research project was to quantitatively study whether the Covid-19 grant acted as a source of labor market recovery by leading to increased investment in productive labor market activities. 

To do this, the research aimed to provide a detailed and quantitative descriptive analysis of transitions in labor market outcomes among Covid-19 grant recipients (measuring whether individuals moved from vulnerable to more productive activities, for example), as well as an analysis of the correlation between grant receipt and labor market outcomes. Finally, it estimated the causal effects of subsidy receipt on a range of productive labor market activities. 

The analysis exploited representative survey data collected during the pandemic in South Africa (from the National Income Dynamics Study: Coronavirus Rapid Mobile Survey, NIDS-CRAM) to answer the following cross-sectional and longitudinal questions about the role of the subsidy: 

• What is the correlational relationship between receipt and job-seeking behavior, labor market participation, and the probability of finding a job ?
• What is the correlation between receipt of the subsidy and the transition from a relatively unproductive labor market state to a more productive state over time?
• Does this relationship vary across different groups and subgroups of recipients?

You will find below the research paper related to this project:

• Can cash transfers to the unemployed support economic activity ? Evidence from South Africa. 

In South Africa, informal work is a feature of the labor market - one in six South African workers is employed in the informal sector. During the pandemic, millions of workers without legal or social protection were disproportionately affected by the negative impacts of measures to prevent the spread of Covid-19 (loss of jobs, hours of work and income...). As a "forgotten" sector in many ways, it should not be forgotten that the informal sector provides livelihoods, employment, and income for millions of workers and business owners, and contributes significantly to the country's Gross Domestic Product (GDP). 

In response to the social and economic effects of the pandemic on vulnerable groups, the South African government has further developed its social protection system. As part of the social assistance component of the Covid-19 stimulus package, it introduced a new Social Relief of Distress (SRD) grant in April 2020. This social assistance grant is for the first time targeted at many informal workers on the basis of their employment status.  

While the positive links between the subsidy and economic activity had already been studied, as well as the limits to this interaction, it remained to be understood whether and how the SRD had been used by informal workers and what economic effects had been generated. This project was conducted by CSDA as part of a larger program to analyze various components of the South African government's Covid and recovery stimulus package.

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To better understand the effects of the Covid-19 and recovery public policy stimulus on reducing inequality, this study qualitatively analyzed the interactions and impacts of the SRD (as well as other subsidies, and the stimulus package more broadly) on local economies.

In particular, it focused on the experiences of women and men traders in the informal sector, who represent a significant proportion of informal sector workers. Through the data collected, differentiated patterns by gender, location, and level of the informal worker in his or her work organization have also been revealed.

You will find below the research paper related to this project:

• The local economic development effects of income transfers. The Social Relief of Distress grant.

The Covid-19 pandemic has forced societies around the world to make difficult trade-offs, as they try respond to the public health crisis on one hand, and to the economic and social distress arising out of it on the other. In South Africa, these combined crises have exacerbated already high levels of unemployment, deepening poverty and heightening levels of hunger and food insecurity.

To mitigate the combined health, social and economic crises stemming from the Covid pandemic, South African President Cyril Ramaphosa announced, in April 2020, a range of support measures to mitigate their impact, including emergency social protection and employment stimulus measures.

Find out more about the Extension in South Africa

This research project aims to study the local stimulus effects of South Africa's PES and national social grants program. In order to do so, it brings together a wide range of existing and new data sources, such as shopper data provided by Shoprite Checkers and programme participant data from Harambee Youth Employment Accelerator, which are securely merged while preserving individual anonymity using local tech company Omnisient’s proprietary encryption technology. 

The primary research focus will be on the multiplier effects of these two programs, that is, the effects of the programs on the economy beyond the direct impact of spending on program participants and their households.

These program-specific multiplier effects are crucial to the overall evaluation of the programs, particularly in the context of budget constraints, but are difficult to identify in a credible empirical manner given the lack of work on them in South Africa. 

In studying them, this project thus has the dual objective of characterizing the spending patterns of stimulus beneficiaries and then examining how such spending is likely to stimulate economic activity in industries further up the product supply chain. Much of the analysis proposed is descriptive and extrapolative rather than causal when it comes to quantifying multiplier effects. 

Thus, the overall goal of this research is to provide an incomplete but conservative and credible quantitative baseline for thinking about program-specific multipliers in South Africa, in an environment where such evidence is lacking.
 

The publications and webinars related to this research project are available below.

South Africa’s spatial inequality translates in significantly different lived experiences among members of different communities across the country. Statistics South Africa gathers data on a range of socio-economic outcomes of individuals and households through an array of national surveys; these data can be analysed at the national, provincial, district and sometimes municipal level, and provide us with a sense of well-being, deprivation and inequities in these, between these different geographies. However, there is not yet one standardised set of data that would allow for a coherent, systematic and longer-term understanding, visualisation and tracking of a broad set of indicators on well-being, that allows for a better understanding of socio-economic outcomes at the community level. Yet, understanding this local context is important, as it is within that local reality that policies and interventions aim to make a difference. South Africa’s government has recognised this too and, with the introduction of its District Development (DD) Model, aims to see different spheres and departments of government work together for larger impact, “higher performance and accountability for coherent service delivery and development outcomes”. A consolidated, central point of information that is accurate and regularly updated, would provide a strong basis for the implementation South Africa’s DD Model. 

This project therefore proposes the development of an interactive, online Community Explorer that would allow researchers, policy-makers and civil society members to build a stronger understanding of well-being at the community (or main area) level in South Africa. Such an understanding is crucial to inform development efforts implemented at that community level. We suggest drawing on the local level information for the Steve Tshwete municipality to pilot the Community Explorer approach.

The local municipality of Steve Tshwete is part of the Mpumalanga province, an area that is home to one of the country's largest coal mining areas and accounts for 83% of the coal produced in South Africa. Steve Tshwete can be considered as one of the commercial centers of this province, with one of the largest local economies in the district dominated by the mining, manufacturing and financial sectors. As such, coal mining and the three coal-fired power plants currently in operation are by far the largest contributor to local employment, accounting for 40% of it. 

Find out more about the Extension in South Africa

This project proposes to leverage the data and tools already available on the South African Youth Explorer (and the related WaziMap tool). The SA Youth Explorer is a SALDRU-led project that constructs and maps a range of indicators that measure key dimensions of well-being among young people, at various geographical levels. Using Census 2011 data, these indicators are currently constructed for the following domains: demographics, education, living environment, economic opportunities and youth poverty (including income poverty and multidimensional deprivation). In addition, the project has begun the construction, verification and maintenance of a central database of service provision, that allows for government-provided services to be mapped down to the main area level.  Finally, it is the project’s aim to explore the possibilities of adding a third layer of knowledge with local labour market demand side information. As such, the overall aim of the proposed project is to provide “an understanding of the functionings of geographical areas as economic and social systems” and thereby “to promote the construction of an integrated and effective” approach to policy and planning that would ultimately contribute to the social betterment of all.

In addition, the project will use the administrative South African Revenue Service (SARS) and National Treasury (NT) Firm-Level (SARS-NT) Panel data developed as a joint SARS–National Treasury–UNU-WIDER initiative which gives matched employee-employer level information and thus allows computing labor market demand indicators. The greatest advantage of the administrative SARS–NT Panel data over other firm-level surveys is that it allows us to have employee-related information such as income, age and gender, as well as firm-level information such as labour costs, gross sales, industry sector, firm age, productivity, firm size, learnership and training cost .  Another advantage of the administrative SARS–NT Panel data which is important for the project is that the worker and firm information can be aggregated to four different geographical levels, namely: province, district municipality, local municipality, and main place . With these geographical levels, it is possible to create local averages of various worker and firm variables that can then be mapped alongside Higher Education Institutes present at the local level.
 

You will find below the two research papers related to this project: 

• Developing a Youth Labour Market Index for South Africa at the sub-national level
• Youth and the just transition. A profile of young NEET in Mpumalanga

In Indonesia, poverty has been declined since 2006 from 17.75% to 9.41% in 2019 due to strong economic growth and other poverty reduction efforts. The inequality, however, remains considerably high. Since 2010, Indonesia’s Gini ratio remains above 0.38. The poverty and inequality situation has been worsen post-pandemic. Indonesia’s headcount poverty rate back to double digit, 10.14% in 2021, while the Gini ratio climbed to 0.384, its highest rate since 2018. While focus on economic inequality is important, the picture of inequality in Indonesia should be assessed through a multi-dimensional aspect, not limited to households income or expenditure. 

Indonesia is a fourth most-populous and also the largest archipelagic country in the world. It makes any policy context should be assessed carefully throughout population groups, income class, and geographical location due to the difference in the provision of public infrastructure and policy efforts within the country. As such, a comprehensive inequality diagnostic report is needed to assess overall condition of inequality in Indonesia not only using monetary indicator (income or expenditure), but also social assets, in terms of access to education, health, water and sanitation, employment, and other basic infrastructures needed for households. 

The Extension of the Research Facility on Inequalities will cooperate with leading research center, LPEM FEB UI, and national statistical office, BPS, to conduct comprehensive inequality assessment and produce an inequality diagnostic report as the basis for launching a national dialogue about inequality and stimulate policy interventions to overcome inequality.

Find out more about the Extension in Indonesia

The objectives of the Inequality Diagnostic Research in Indonesia are: 

1. to produce a working paper which will consolidate data and resources (papers) around inequality issues to profile the prevailing situation of inequality in Indonesia.
2. to conduct capacity building activities for national research center and the national statistical office in performing data analysis for the Inequality Diagnostic Research Report.
3. to introduce specific tools for multidimensional inequalities diagnostic in Indonesia.

This research has led to a comprehensive Inequality Diagnostic Research Report in Indonesia and contributes to public debate and discussion on Inequality in Indonesia. Indeed, this project performed a thorough analysis of multi-dimensional aspect of inequality in Indonesia and a comprehensive breakdown based on income groups, geographical locations, and gender. It also includes analysis of prior policies that have been taken by the government to reduce inequality and how it performs overtime. The output of this research will help government to identify priorities and policy options in order to further reduce them.
 

You will find below the research publications related to this project:

• The Inequality Diagnostic Report: Indonesia
• When Information Feeds Social Transformation in Indonesia: Understanding and Addressing Inequality outside Java through Diagnostic Dissemination

This research project proposes to estimate the distributive effect of gasoline taxes using a fiscal incidence considering these effects in the context of Mexico´s fiscal system, including the principal tax and spending instruments. 

In 2014, Mexico’s Finance Ministry (SHCP) introduced a special tax (IEPS) on carbon as a green tax aimed at reducing the green gas emission associated with fossil fuels, mainly gasoline and diesel. However, the tax revenue (4699 million pesos in 2014) and the environmental impact of this tax are marginal: in the past decade, until 2014, this tax had a negative value, thus working as a subsidy. Since that year, it became a tax, which has grown significantly in recent years, representing close to 300 billion pesos in 2019 and 2020. This is therefore in effect by far the most important green tax implemented in Mexico today. 

This analysis is of particular interest for Mexico at present because the transition from fuel subsidies to fuel taxes represents in effect the principal tax reform implemented in Mexico over the last decade in terms of both tax revenue (from -300 to +300 billion pesos in tax revenue) and distribution. Gasoline taxes have significant impacts on all the population, both directly on middle- and higher-income households through private transport, but especially indirectly for lower income households through public transport and transport costs for all goods and services, notably food. Preliminary analysis at the Fiscal Policy Equity Lab (FPEL) reveals that the increase in the indirect tax burden for the poor associated to gasoline taxes may reverse the effect poverty-reduction effect of direct transfers, even after their recent expansion. 

Quantifying these impacts precisely will allow the design of compensatory instruments to protect the poorest and most vulnerable groups from the regressive effects of these taxes. 

Find out more about the Extension in Mexico

This project is a joint undertaking between RIBOS, CEQ Institute and LNPP. It seeks to estimate the effect of green taxes in the context of the overall Mexican tax system through the international methodology developed by the Commitment to Equity Institute (CEQI), using INEGI data from the Encuesta de Ingresos y Gastos de los Hogares (ENIGH) for 2014-2020, among other data sources. 

This methodology will allow an estimation the effect of green taxes in the context of the overall fiscal system. This methodology facilitates comparability in time and space, and generates a wide variety of incidence indicators, including effects on the income Gini coefficient as well as income poverty using national and international poverty lines. 

This project ultimately aims to provide Mexican policy makers and stakeholders with timely analyses of the effects of tax policies on inequality and poverty. The research conducted will therefore result in: 

• a research paper,
• a policy brief whose analysis is based on the collaborative intelligence technique. Two sessions in which the model calibration and hypotheses will be discussed following the collaborative modeling framework. Participants in the sessions will be members of the expert network and key tax policy makers.

You will find below the research paper related to this project:

• Distributive impact of green taxes in Mexico (July 2024)

The policy brief related to this project will be published here soon.

This project is a follow-up of the research project developed by CEEY and El Colegio de México in the first phase of the EU-AFD Research Facility on Inequalities. The results showed the need for structural changes to break the bottlenecks of social mobility and reduce inequality in Mexico. 

Based on the above, the new phase of the project focuses on the knowledge base that will inform the setting up of care systems in the states of Guanajuato and Nuevo Leon and in the municipality of San Pedro Garza Garcia. 

Guaranteeing the right to care in the Constitution is essential to advance on the basis of social consensus. In order to define the articulation mechanisms in a law, it is necessary to understand the care systems at different levels as transversal and multipurpose policies that are worth discussing collectively, as they imply much more than the already great challenge of expanding the existing infrastructure of services and social spending. The Care Economy also implies creating fiscal strategies to redistribute paid and unpaid work, adapted policies for those who require care and for caregivers, social co-responsibility and co-responsibility of the private sector.

Therefore, it requires more and better statistical information, strengthening surveys and data systems, as well as developing studies to make visible the interdependence of care with multiple agendas, identifying care needs and their characteristics, available supply and unmet demand, allowing for strategic planning and follow-up from the short to the long term, starting with priority groups that include children, people with disabilities, the sick and elderly, and their caregivers.

Find out more about the Extension in Mexico

Given the above context, the objective of this project is the construction of two products that address two identified needs:

1. a design proposal for a state and municipal-level care system: it is necessary to develop a care system designs that address the structural inequalities for which their creation is sought. In this sense, it is necessary to establish a complete, functional and sustainable design.
2. a proposal for the collection and systematization of primary information for the design and/or monitoring of the care system: a second need arises from the above in terms of systematization of primary and administrative information that feeds, as far as possible, the original design of the care systems, as well as their monitoring over time. 
    

You will find below the research papers related to this project:

• Social mobility, care policies and social protection (August 2024)
• Social mobility, care policies and social protection policies in Nuevo León (September 2024)