The impact of government support on welfare of low and middle income households in Limpopo province
South Africa is a developing country and a developing household‘s welfare has become residualised through the restrictions of benefits which have contributed to the increase in poverty with the further elimination and relegation of different income groups. Government support in South Africa has been accepted as a policy option to improve the basic household standard of living. Government support is important for poverty elimination as it ensures a basic minimum standard of living for low and middle income households or households who are considered as poor; and contributes to achieving a more equitable income distribution in society. The study therefore analyses the impact of government support on the welfare of low and middle income households in Limpopo province. The dataset used for the study was obtained from an income and expenditure survey data conducted in 2010/2011. A sample size of 3306 households from Limpopo province was used for the study. The results show that socio-economic factors, such as age, gender, household size, educational level, employment and salary (income), together with households assets, such as television, DVD player, motorcycle, motor vehicle, washing machine, value of house, own production (inpr) and government support services such as RDP support, subsidised house, medication and social welfare (grant), are the most important features considered in household welfare. The empirical results show that low and middle income households in general are most likely to have low standards of living (welfare) due to low levels of education, large household size, and lack of employment. In addition, low income households with low levels of education are all found to be systematically associated with a low standard of living. Low income households headed by males have low welfare levels, compared to males in middle income households. The results further suggest that ownership of assets such as televisions, motor vehicles and motor cycles, have significantly negative impacts on the welfare of households in lower and middle income category. The negative impacts of these assets might be as a result of the cost associated with subscription, maintenance, fuel and other costs incurred to maintain these assets. Households that have their own production in a form of subsistence farming have improved welfare, relative to those who do not have any food production sources. Therefore, in order to improve the welfare of low income households, there is the need to encourage people to engage in subsistence farming or to have their own food production source. Concerning government support variables, results show that low and middle income households, which receive government support of free houses, subsidised houses, medication and social welfare (grants), gain welfare improvements, relative to those who did not have access to such support services. The empirical results from propensity score matching were employed to analyse the impact of real impact on various government support services for low and middle income household. The empirical finding from the average treatment on the treated (ATT) from Propensity Score Matching estimations, using nearest neighbor and Kernel-based matching algorithms, showed that the adoption of government support services exerted greater positive impact of change in the welfare of low income category households. The results generally reveal both positive and negative impacts of the various government support services on the welfare of middle income households in the study area. Different specific policy interventions are required to promote government support for change in welfare for the low and middle income categories in Limpopo province.