Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa

South Africa faces the intertwined challenges of weak economic growth, persistently high poverty and extreme income inequality. This paper assesses what levels of poverty reduction and distributional change are realistically achievable over the next fifteen years under plausible growth scenarios, given binding structural and fiscal constraints. Using a stylised log-normal income distribution calibrated to 2023 data, the analysis simulates poverty outcomes under sustained per capita growth rates of 1–2 per cent (consistent with GDP growth of 2–3 per cent) and cumulative Gini reductions of 0, 2, 4 and 6 points. The results reveal a clear asymmetry. Moderate growth generates substantial reductions in poverty at both lower- and upper-bound poverty lines, while plausible medium-term reductions in inequality make a smaller incremental contribution. van der Berg, S. (2026). Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa (ERSA Policy Paper No. 48). Economic Research Southern Africa. https://doi.org/10.71587/rr3y8746

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Journal
ERSA Working Paper Series
Published
2026-04-22
DOI
https://doi.org/10.71587/rr3y8746
Primary Topic
Income, Poverty, and Inequality
Type
article
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Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa

Servaas van der Berg
ERSA Working Paper Series
Income, Poverty, and Inequality
article

Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa

Servaas van der Berg
article en

Abstract

South Africa faces the intertwined challenges of weak economic growth, persistently high poverty and extreme income inequality. This paper assesses what levels of poverty reduction and distributional change are realistically achievable over the next fifteen years under plausible growth scenarios, given binding structural and fiscal constraints. Using a stylised log-normal income distribution calibrated to 2023 data, the analysis simulates poverty outcomes under sustained per capita growth rates of 1–2 per cent (consistent with GDP growth of 2–3 per cent) and cumulative Gini reductions of 0, 2, 4 and 6 points. The results reveal a clear asymmetry. Moderate growth generates substantial reductions in poverty at both lower- and upper-bound poverty lines, while plausible medium-term reductions in inequality make a smaller incremental contribution. van der Berg, S. (2026). Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa (ERSA Policy Paper No. 48). Economic Research Southern Africa. https://doi.org/10.71587/rr3y8746

ERSA Working Paper Series
Stellenbosch University (ZA)
No poverty
Openalex Percentile: Top 10%
Income, Poverty, and Inequality
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Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa — Servaas van der Berg · ERSA Working Paper Series (2026) | TGRS Research Map | TGRS