The authors estimate the effect of the child support grant on mothers' labour supply in South Africa. Identification is based on the use of specific samples, such as black mothers, aged 20 to 45, whose youngest child is aged within 2 years of the age eligibility cut-off, and unanticipated variation over the years in the age eligibility cut-off. Balancing tests across the age cut-off are used to show there are no significant differences between mothers of eligible and ineligible children in the samples used, over the years. Different techniques are used to estimate the effect of the child support grant from many angles, including simple OLS as a bench mark, a difference in difference estimator, using appropriately constructed treatment and control groups, instrumental variables estimates, and descriptive analysis. The effect of having an age eligible child is indeterminate, and depends on whether the shock of additional income is seen as transitory or permanent. Low income households find grant receipt to be more important, with large effects on employment probability. Many robustness and specification checks are used, including placebo regressions in the pre-treatment years, to ensure the estimated effect is not due to age or another variable.
Eyal, K.; Woolard, I. Female labour force participation and the child support grant in South Africa. (2010) 64 pp.