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The labour market and household income inequality in South Africa: existing evidence and new panel data

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Author Info

  • Murray Leibbrandt

    (School of Economics, University of Cape Town, S. Africa)

  • Ingrid Woolard

    (Department of Economics, University of Port Elizabeth, S. Africa)

Abstract

South Africa's very high Gini coefficient has always served as the starkest indicator of the country's extreme inequality. The racial legacy has always been highlighted in explaining this inequality. This paper presents evidence that between race contributions to inequality have declined from the early 1970s to the mid 1990s. However, they are still considerably higher than comparative international figures. The racially rigged labour market has always been assumed to operate as the key force underlying these changing inequality patterns and the paper presents findings for more formal decompositions of the linkage between the labour market and household inequality. This work confirms the dominance of the labour market in driving total South African, African and even KwaZulu-Natal inequality. However, the contribution of wage income is uneven across these different levels of aggregation and across time; suggesting complex patterns of inequality generation. The following lengthy section of the paper uses a panel data set to measure and explain the mobility patterns of a sample of African households in Kwazulu-Natal. It is found that there was less income mobility at the top and the bottom of the distribution than in the middle and overall there was an increase in income differentiation. Simple mobility profiling and more complex modelling confirm the importance of labour market changes in influencing movement of real adult equivalent income of households as well as mobility across deciles, across poverty lines. Demographic changes are also seen to be very important. The paper concludes with a summary and some suggestions for further work. Copyright © 2001 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 13 (2001)
Issue (Month): 6 ()
Pages: 671-689

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Handle: RePEc:wly:jintdv:v:13:y:2001:i:6:p:671-689

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Web page: http://www3.interscience.wiley.com/journal/5102/home

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  1. Almeida dos Reis, Jose Guilherme & Paes de Barros, Ricardo, 1991. "Wage inequality and the distribution of education : A study of the evolution of regional differences in inequality in metropolitan Brazil," Journal of Development Economics, Elsevier, Elsevier, vol. 36(1), pages 117-143, July.
  2. Klasen, Stephan & Woolard, Ingrid, 2000. "Surviving Unemployment without State Support: Unemployment and Household Formation in South Africa," IZA Discussion Papers 237, Institute for the Study of Labor (IZA).
  3. Leibbrandt, M.V. & Woolard, C.D. & Woolard, I.D., 1996. "The Contribution of Income Components to Income Inequality in South Africa: A Decomposable Gini Analysis," Papers, World Bank - Living Standards Measurement 125, World Bank - Living Standards Measurement.
  4. Levison, D. & Lam, D., 1990. "Declining Inequality In Schooling In Brazil And Its Effects On Inequality In Earning," Papers, Yale - Economic Growth Center 618, Yale - Economic Growth Center.
  5. Aaberge, Rolf, et al, 2002. "Income Inequality and Income Mobility in the Scandinavian Countries Compared to the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 48(4), pages 443-69, December.
  6. Glewwe, P., 1990. "Investigating The Determinants Of Household Welfare In Cote D'Ivoire," Papers, World Bank - Living Standards Measurement 71, World Bank - Living Standards Measurement.
  7. Lee A. Lillard & Robert J. Willis, 1976. "Dynamic Aspects of Earnings Mobility," NBER Working Papers 0150, National Bureau of Economic Research, Inc.
  8. Leibbrandt, Murray & Woolard, Christopher & Woolard, Ingrid, 2000. "The Contribution of Income Components to Income Inequality in the Rural Former Homelands of South Africa: A Decomposable Gini Analysis," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 9(1), pages 79-99, March.
  9. Richard V. Burkhauser & John G. Poupore, 1997. "A Cross-National Comparison Of Permanent Inequality In The United States And Germany," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 10-17, February.
  10. Ingrid Woolard & Murray Leibbrandt, 1999. "Household Incomes, Poverty and Inequality in a Multivariate Framework," Working Papers, University of Cape Town, Development Policy Research Unit 99031, University of Cape Town, Development Policy Research Unit.
  11. H. Bhorat & J. Hodge, 1999. "Decomposing Shifts in Labour Demand in South Africa," South African Journal of Economics, Economic Society of South Africa, Economic Society of South Africa, vol. 67(3), pages 155-168, 09.
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Cited by:
  1. Johannes G. Hoogeveen & Berk Özler, 2005. "Not Separate, Not Equal: Poverty and Inequality in Post-Apartheid South Africa," William Davidson Institute Working Papers Series wp739, William Davidson Institute at the University of Michigan.
  2. Heshmati, Almas, 2004. "Continental and Sub-Continental Income Inequality," IZA Discussion Papers 1271, Institute for the Study of Labor (IZA).
  3. Heshmati, Almas, 2004. "Data Issues and Databases Used in Analysis of Growth, Poverty and Economic Inequality," IZA Discussion Papers 1263, Institute for the Study of Labor (IZA).
  4. Tregenna, F., 2009. "The Relationship Between Unemployment and Earnings Inequality in South Africa," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0907, Faculty of Economics, University of Cambridge.
  5. Derek Yu & Sihaam Nieftagodien, 2007. "Poverty and Migration: Evidence from the Khayelitsha/Mitchell's Plain Area," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 11, Southern Africa Labour and Development Research Unit, University of Cape Town.
  6. Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo Group Munich.
  7. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute for the Study of Labor (IZA).
  8. Naude, Willem & Coetzee, Rian, 2004. "Globalisation and inequality in South Africa: modelling the labour market transmission," Journal of Policy Modeling, Elsevier, Elsevier, vol. 26(8-9), pages 911-925, December.

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