Does the child support grant incentivise childbirth in South Africa?

Abstract

This paper considers the perverse incentive that can be created for poor households that are benefitting from the South African Child Support Grant (CSG). We acknowledge the fact that the CSG has been successful in improving child outcomes. However, if caregivers see the CSG as a livelihood strategy and respond with multiple births, this will jeopardise the long-term fiscal sustainability of the grant. Such an incentive may also perpetuate poverty and inequality , which will defeat the very purpose the CSG is meant to achieve. To examine if the Child Support Grant incentivise childbirth in South Africa, we estimate the relationship between CSG receipt and birth attempts over the last decade in the National Income Dynamic Study (NIDS) sample. In our analysis we make use of a number of econometric approaches including the instrumental variable estimator with possession of the South African identity card as an instrumental variable to control for selection. We argue that while possession of the identity card is a necessary condition for CSG, this variable is not driven by the outcome of child births and cannot be influenced by individual mothers because possession of identity card depends on government administrative rules and bureaucracy. Our result shows that those who benefit from the CSG have made more birth attempts within the last decade compared to non-beneficiaries. We find that this result is robust to the choice of econometric technique. We argue that there is a need to consider structuring welfare grants in a way that will incentivise behaviour that will align with the developmental goals of the nation. An unconditional, but targeted basic income grant, for example, is likely to offer fewer perverse incentives.