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Income and Non-Income Inequality in Post-Apartheid South Africa: What are the Drivers and Possible Policy Interventions?


  • Haroon Bhorat
  • Carlene van der Westhuizen
  • Toughedah Jacobs

    () (Development Policy Research Unit
    Director and Professor)


South Africa has historically been ranked as one of the most unequal societies in the world and, while the country has experienced sustained positive economic growth since 1994, the impact of this growth on poverty, and particularly inequality, has been disappointing. Analysis using data from the 1995 and 2000 Income and Expenditure Surveys has found, for example, a significant increase in income inequality over the period and, further, that this increase in inequality eroded any significant poverty-reduction gains from higher economic growth. The release of the Income and Expenditure Survey 2005 enables us to examine changes in inequality over the decade between 1995 and 2005. Some preliminary analysis, however, shows a further increase in inequality over the second half of the period. This new result would possibly suggest that South Africa is now the most consistently unequal economy in the world. Critically, the persistent and increasing levels of inequality have been acting as a constraint ensuring that South Africa’s economic growth results in significant declines in household poverty levels. This study has two main objectives. Firstly, the study aims to identify the drivers of the reproduction of inequality in post-apartheid South Africa. The second objective is to examine what policy levers are available to help mitigate the impact of increased inequality in South Africa. Based on the identification of what is driving the increasing levels of inequality, appropriate policy interventions, including assessing the impact and sustainability of existing policies such as the increased provision of social grants, will be evaluated. We find that not only has income inequality remained high for the period under review, but it has also increased significantly between 1995 and 2005. Throughout the time period wage inequality has been the main contributor to the growing income inequality. For a more holistic representation of inequality, we consider the effect of increased public and private assets on non-income inequality. We find that there has been a universal decrease in non-income inequality in South Africa. We also find that the effect of income inequality has been to dampen growth, specifically pro-poor growth. While we found that social transfers have little effect on income inequality when we decomposed the various sources of income, when grant income is excluded as a source of income from total income we find that it is an extremely important supportive source of income and without it many households would experience negative income growth.

Suggested Citation

  • Haroon Bhorat & Carlene van der Westhuizen & Toughedah Jacobs, 2009. "Income and Non-Income Inequality in Post-Apartheid South Africa: What are the Drivers and Possible Policy Interventions?," Working Papers 09138, University of Cape Town, Development Policy Research Unit.
  • Handle: RePEc:ctw:wpaper:09138

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    References listed on IDEAS

    1. Morné Oosthuizen, 2006. "The Post-Apartheid Labour Market: 1995-2004," Working Papers 06103, University of Cape Town, Development Policy Research Unit.
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    Cited by:

    1. Greenstein Joshua, 2015. "New Patterns of Structural Change and Effects on Inclusive Development: A Case Study of South Africa and Brazil," WIDER Working Paper Series 006, World Institute for Development Economic Research (UNU-WIDER).
    2. Miquel Pellicer & Vimal Ranchhod & Mare Sarr & Eva Wegner, 2011. "Inequality Traps in South Africa: An overview and research agenda," SALDRU Working Papers 57, Southern Africa Labour and Development Research Unit, University of Cape Town.
    3. Haroon Bhorat & Benjamin Stanwix & Derek Yu, 2014. "Non-Income Welfare And Inclusive Growth In South Africa," Working Papers 201407, University of Cape Town, Development Policy Research Unit.
    4. Kehinde O. Omotoso & Steven F. Koch, 2017. "Exploring Child Poverty and Inequality in Post-Apartheid South Africa: A Multidimensional Perspective," Working Papers 201718, University of Pretoria, Department of Economics.
    5. Haroon Bhorat & Carlene Van Der Westhuizen & Derek Yu, 2014. "The Silent Success: Delivery of Public Assets Since Democracy," Working Papers 201403, University of Cape Town, Development Policy Research Unit.
    6. Emily Frame & Ariane de Lannoy & Murray Leibbrandt, 2016. "Measuring multidimensional poverty among youth in South Africa at the sub-national level," SALDRU Working Papers 169, Southern Africa Labour and Development Research Unit, University of Cape Town.
    7. Darlington Mushongera & Precious Zikhali & Phindile Ngwenya, 2017. "A Multidimensional Poverty Index for Gauteng Province, South Africa: Evidence from Quality of Life Survey Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(1), pages 277-303, January.

    More about this item


    South Africa: income- and non-income inequality;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics


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