Government Expenditure on Income Inequality in South Africa

Abstract

Purpose: The study aimed the government expenditure on income inequality in South Africa

Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.

Findings: Government expenditure in South Africa, especially on social grants and public services, helps reduce income inequality by redistributing resources to lower‑income households. Research shows that increased social welfare spending is linked to lower income inequality, as measured by the Gini coefficient. Public investment in education and transfers also helps improve access to opportunities, although its effectiveness depends on how spending is structured. However, structural factors like labor market disparities and legacy inequalities limit the full impact of government spending on inequality.

Unique contribution to theory, practice and policy: The study of government expenditure on income inequality in South Africa makes a unique contribution to theory by providing a deeper understanding of how fiscal policies, particularly government spending, affect income distribution within developing economies. It enriches existing economic theory by exploring the nuanced relationship between social spending, wealth redistribution, and the reduction of inequality, offering insights specific to South Africa’s socio-economic context. In practice, the research highlights the effectiveness of targeted government spending, such as on education, healthcare, and social grants, in addressing income disparities, and offers practical recommendations for enhancing these policies. The study also provides policy implications for South African lawmakers and institutions, suggesting ways to optimize public expenditure to reduce inequality and promote sustainable economic growth. Ultimately, this research informs both economic policymakers and development practitioners, guiding efforts to design more inclusive fiscal policies that foster equitable socio-economic development in South Africa.