Abstract
M.Com. (Development Economics)
This study sets out to assess the implications of population ageing and social security spending for poverty in South Africa. The empirical analysis uses time series data for South Africa spanning the period 1994 – 2015. The study employs an Autoregressive Distributed Lag (ARDL) model to determine short- and long-run impacts of population ageing and social security spending on poverty. The ARDL cointegration modelling is particularly flexible in terms of the level of integration of the variables of interest. Results show that an increase in the old age dependency ratio endagers poverty reduction in the short-run. Although the relationship between the old age dependency ratio and poverty is insignificant in the long-run, the positive sign indicates that population ageing remains a non-negligible challenge for South Africa. These findings are perhaps suggesting that the elderly are drawing on savings accumulated during their active years; even as the rate of youth absorption into the labour market may be slower than that of ritirees exiting the labour market. Results also show that, in the long-run, a 1 per cent increase in social security spending worsens poverty by 0.663 per cent. These findings have implications for the observation that social security spending in its current form in South Africa may not be sufficient in sustainably reducing poverty.