Motives for Inter-Household Transfers in South Africa

Abstract

In this paper we examine the patterns of inter-household transfers using a national level survey data from South Africa. Compared to an African household, a non-African household is less likely to receive and send private transfers. Further the amount of transfers sent and received is also lower for White, Indian and Coloured households compared to African households. Transfer flow from younger households and to the older households in the case of the African households but in the opposite direction for the White households. Transfers flow from the relatively more affluent to the less affluent households and we also find significant evidence of crowding out of private transfers in the presence of government pension and other government transfers, particularly for African households. Living arrangements have a significant impact on the probability of the household receiving and sending transfers. Finally a significant part of private transfers received by African households appears to be for insurance against idiosyncratic employment and illness shocks.