Disability Cash Transfers in the Context of Poverty and Unemployment: The Case of South Africa

South Africa’s Disability Grant (DG) program has been criticized for its poor administration and the dependency culture it promotes. This paper assesses the program’s targeting effectiveness and its effects on labor supply. Using disability self-reports and standard measures of economic well being, the results suggest that DG’s inclusion errors are relatively limited but exclusion errors are substantial and serious. The paper also shows that increased leniency in disability screening policy in the Gauteng province in the early 2000s does not appear to have altered labor market behaviors relative to Northern Cape, a province where there was no change in policy.