basic income grant

Essay by g11s0684College, UndergraduateB+, September 2014

download word file, 3 pages 0.0

Basic income grant

Social impact

Social system is most successful when measured against destitution (poverty). Simply shows that BIC will grants do help South Africans in taking them out of complete poverty and placing them in positions where they can now afford to put food on the table.


Households that receive this are more likely to have access to education and health facilities as they can now afford transport fees. Contribute to equity and social cohesion.

Enhance responses to the HIV/AIDS pandemic

Universal Coverage -not subject to a means test, which would save government time and money. The Basic Income Grant requires substantially less administrative resources- no "means test", targeting through the tax system (Cost effective!)

Providing all South Africans with an economic stake improves social stability and reinforces the foundations for more investment and economic growth.

Effective social security reform is developmental and affordable, generating a positive growth impact that promotes job creation while improving the effectiveness of social delivery and long term sustainability.

Stigmatisation-recipients are'nt labelled as poor

Will increase labour participation: active job seekers

Combats poverty tax: more sidposable income for poor

Those who don't need grant wont register for it

Income and substitution effects

Income effects:

More income from grant will lead to less hours people willing to work.

Might use the time and money that the income grants them for job search further away rather than being employed in a low wage job.

Another effect is that workers that receive social assistance are more productive due to access to better nutrition, healthcare, housing and transportation. Employer will be willing to pay higher wages as result of productivity.

Two effects on savings level

First argument:

Saving s rate is negatively related to social grants because the higher income groups get taxed in order to raise...