Promises and limits: What the SRD grant tells us about cash transfers in constrained labour markets

How effective are cash transfers in improving labour market outcomes in contexts where jobs are scarce and barriers to self-employment high? We examine the effects of South Africa's Social Relief of Distress (SRD) grant – a small, unconditional cash transfer targeting the unemployed – and find that it increases job search and employment without discouraging work, at least on average. However, in a labour market as structurally constrained as South Africa's, these gains are modest and short-lived, pointing to the need for complementary reforms that go beyond income support alone.