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Estimating the Distribution of Household Wealth in South Africa

Author

Listed:
  • Aroop Chatterjee

    (WITS - University of the Witwatersrand [Johannesburg])

  • Léo Czajka

    (UCL - Université catholique de Lille)

  • Amory Gethin

    (WIL - World Inequality Lab , PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This paper estimates the distribution of personal wealth in South Africa by com- bining tax microdata covering the universe of income tax returns, household surveys and macroeconomic balance sheets statistics. We systematically compare estimates of the wealth distribution obtained by direct measurement of net worth, rescaling of reported wealth to balance sheets totals, and capitalisation of income flows. We document major inconsistencies between available data sources, in particular re- garding the measurement of dividends, corporate assets and wealth held through trusts. Both household surveys and tax data remain insufficient to properly capture capital incomes. Notwithstanding a significant degree of uncertainty, our findings reveal unparalleled levels of wealth concentration. The top 10 per cent own 86 per cent of aggregate wealth and the top 0.1 per cent close to one third. The top 0.01 per cent of the distribution (3,500 individuals) concentrate 15 per cent of household net worth, more than the bottom 90 per cent as a whole. Such high levels of inequality can be accounted for in all forms of assets at the top end, including housing, pen- sion funds and other financial assets. Our series show no sign of decreasing wealth inequality since apartheid: if anything, we find that inequality has remained broadly stable and has even slightly increased within top wealth groups.

Suggested Citation

  • Aroop Chatterjee & Léo Czajka & Amory Gethin, 2020. "Estimating the Distribution of Household Wealth in South Africa," World Inequality Lab Working Papers hal-02876974, HAL.
  • Handle: RePEc:hal:wilwps:hal-02876974
    Note: View the original document on HAL open archive server: https://hal-pjse.archives-ouvertes.fr/hal-02876974
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    References listed on IDEAS

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    Cited by:

    1. Aroop Chatterjee & Léo Czajka & Amory Gethin, 2021. "A Wealth Tax for South Africa," World Inequality Lab Working Papers halshs-03131182, HAL.
    2. Amory Gethin, 2020. "Extreme Inequality and the Structure of Political Cleavages in South Africa, 1994-2019," Working Papers halshs-03022282, HAL.
    3. Bassier, Ihsaan & Budlender, Joshua & Zizzamia, Rocco & Leibbrandt, Murray & Ranchhod, Vimal, 2021. "Locked down and locked out: Repurposing social assistance as emergency relief to informal workers," World Development, Elsevier, vol. 139(C).
    4. Ihsaan Bassier & Ingrid Woolard, 2021. "Exclusive Growth? Rapidly Increasing Top Incomes Amid Low National Growth in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 89(2), pages 246-273, June.
    5. David Francis & Imraan Valodia & Edward Webster, 2020. "Politics, Policy, and Inequality in South Africa Under COVID-19," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 9(3), pages 342-355, December.

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    Keywords

    Distribution; Wealth; South Africa; inequality; welfare state;
    All these keywords.

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