Three essays on microeconomics and social policy in South Africa

This dissertation contains three essays on microeconomic issues in social policy for South Africa. The first chapter presents a test of whether the South African Old Age Pension (OAP) system has the effect of displacing or 'crowding out' systems of private support between the elderly and their adult children working away from home as migrants. Using data from two income and expenditure surveys for South Africa and a range of specifications I show that every rand of public pension income received by the elderly leads to a.2-.4 rand reduction in the level of private transfers received from children. However, income from other sources of income do not result in reductions in private transfers, implying that donors of private transfers do not treat all sources of recipient income identically.;The final chapter explores patterns of racial inequality in earnings and employment among men in the public and private sectors of South Africa. I make use of data from an annual labor force survey to document the magnitude of racial inequities and explore the factors these differences can be attributed to. Applying a semiparametric technique to decompose wage densities, I show that much of the racial wage differences can be attributed to racial differences in factors such as education and occupation. The difference in wages in the public sector is smaller than in the private sector, and can also be accounted for more completely by differences in observable characteristics in the two sectors.;The second chapter is an exploration of the role that OAP's play in the income and expenditure patterns of households. I analyze data from three surveys collected in Venda from 1986 to 1992, a period during which OAP's were extended to Africans. I document the tremendous impact this program had on raising incomes and reducing poverty. I also show that the extended structure of households means that even though the program is targeted towards the elderly, it reaches households containing many children. Finally, I examine household expenditure patterns under the pension scheme and find that households spend pension income the same as other income.