The Relationship Between Unemployment and Earnings Inequality in South Africa
Unemployment and earnings inequality have moved closely together in South Africa in recent years, suggesting that there may not be a trade-off between them as the literature generally suggests. This article explores the relationship between unemployment and earnings inequality in South Africa, specifically investigating the extent to which changes in unemployment can account for changes in earnings inequality. Decomposing overall income inequality by factor source shows the overwhelming importance of earnings in income inequality more generally. Decomposing earnings inequality by employment status reveals the centrality of unemployment in accounting for the level and trend of earnings inequality. The distribution of employment in the formal and informal sectors is found to be of lesser importance in explaining earnings inequality, as is wage dispersion within each of these categories. The findings point to the critical importance of reducing unemployment in South Africa if the extremely high levels of inequality are to be addressed.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Ozler, Berk, 2007. "Not Separate, Not Equal: Poverty and Inequality in Post-apartheid South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 55(3), pages 487-529, April.
- Berk Özler, 2007. "Not Separate, Not Equal: Poverty and Inequality in Post-apartheid South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 487-529.
- Martín González & Alicia Menendez, 2000. "The Effect of Unemployment on Labor Earnings Inequality: Argentina in the Nineties," Working Papers 216, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
- 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,"
125, World Bank - Living Standards Measurement.
- 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 125a, World Bank - Living Standards Measurement.
- Murray Leibbrandt & Laura Poswell & Pranushka Naidoo & Matthew Welch & Ingrid Woolard, 2005.
"Measuring Recent Changes in South African Inequality and Poverty using 1996 and 2001 Census Data,"
05094, University of Cape Town, Development Policy Research Unit.
- Murray Leibbrandt & Laura Poswell & Pranushka & Matthew Welch & Ingrid Woolard, 2004. "Measuring recent changes in South African inequality and poverty using 1996 and 2001 census data," SALDRU/CSSR Working Papers 084, Southern Africa Labour and Development Research Unit, University of Cape Town.
- Phillippe G. Leite & Terry McKinley & Rafael Guerreiro Osório, 2006. "The Post-Apartheid Evolution of Earnings Inequality in South Africa, 1995-2004," Working Papers 32, International Policy Centre for Inclusive Growth.
- Cowell, Frank A & Jenkins, Stephen P, 1995. "How Much Inequality Can We Explain? A Methodology and an Application to the United States," Economic Journal, Royal Economic Society, vol. 105(429), pages 421-30, March.
- Glyn, Andrew, 1995. "Unemployment and inequality," Discussion Papers, Research Unit: Economic Change and Employment FS I 95-303, Social Science Research Center Berlin (WZB).
- Gonzalvez, M. & Menendez, A., 2000. "The Effect of Unemployment on Labor Earnings Inequality: Argentina in the Nineties," Papers 193, Princeton, Woodrow Wilson School - Development Studies.
- Murray Leibbrandt & Ingrid Woolard, 2001. "The labour market and household income inequality in South Africa: existing evidence and new panel data," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(6), pages 671-689.
- Mookherjee, Dilip & Shorrocks, Anthony F, 1982. "A Decomposition Analysis of the Trend in UK Income Inequality," Economic Journal, Royal Economic Society, vol. 92(368), pages 886-902, December.
- Björklund, Anders & Palme, Mårten, 2001.
"The Evolution of Income Inequality During the Rise of the Swedish Welfare State 1951 to 1973,"
SSE/EFI Working Paper Series in Economics and Finance
0450, Stockholm School of Economics, revised 07 Jun 2001.
- Anders Björklund & Mårten Palme, 2000. "The Evolution of Income Inequality During the Rise of the Swedish Welfare State1951 to 1973," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 26, pages 115-128.
- Luis Ayala & Rosa Martinez & Jesus Ruiz-Huerta, 2002. "Institutional determinants of the unemployment-earnings inequality trade-off," Applied Economics, Taylor & Francis Journals, vol. 34(2), pages 179-195.
- Adsera, A. & Boix, C., 1998.
"Must We Choose? European Unemployment, American Inequality and the Impact of Education and Labour Market Institutions,"
UFAE and IAE Working Papers
414.98, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Adsera, Alicia & Boix, Carles, 2000. "Must we choose? European unemployment, American inequality, and the impact of education and labor market institutions," European Journal of Political Economy, Elsevier, vol. 16(4), pages 611-638, November.
- Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-85, November.
- Paul A. Storer & Marc A. van Audenrode, 1998. "Exploring the Links between Wage Inequality and Unemployment: A Comparison of Canada and the US," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 233-253, February.
- Silber, Jacques, 1993. "Inequality Decomposition by Income," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 545-47, August.
- Jenkins, Stephen P, 1995. "Accounting for Inequality Trends: Decomposition Analyses for the UK, 1971-86," Economica, London School of Economics and Political Science, vol. 62(245), pages 29-63, February.
- Bjorklund, Anders, 1991. " Unemployment and Income Distribution: Time-Series Evidence from Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 93(3), pages 457-65.
- Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
- Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
- Glyn, Andrew, 1995. "The Assessment: Unemployment and Inequality," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 1-25, Spring.
When requesting a correction, please mention this item's handle: RePEc:cam:camdae:0907. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Howard Cobb)
If references are entirely missing, you can add them using this form.