This article studies the distributional incidence of public goods and implications for the measurement of poverty and inequality. I combine newly digitized budget data with census and survey microdata to estimate the distribution of all government transfers received by income group in South Africa from 1993 to 2019. My estimates account for changes in the progressivity of different types of policies and allocate all public services to individuals, including education, healthcare, police services, transport infrastructure, housing subsidies, and local government services. All public goods reduce inequality, but with large variations.
About 60% of education expenditure is received by the bottom 50%, compared to only 7% of spending on transport infrastructure. There have been major improvements in access to public services since the end of apartheid: accounting for the consumption of public goods raises the real income growth rate of the poorest 50% by 80%. These findings highlight the
critical need to incorporate in-kind government transfers in poverty and inequality statistics.