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Determinants of Income Mobility and Household Poverty Dynamics in South Africa

  • Woolard, Ingrid

    ()

    (University of Cape Town)

  • Klasen, Stephan

    ()

    (University of Göttingen)

In this paper we analyse household income mobility dynamics among Africans in South Africa’s most populous province, Kwazulu-Natal, between 1993 and 1998. Compared to industrialized and most developing countries, mobility has been quite high, as might have been expected after the transition in South Africa. This finding is robust when measurement error is controlled for. When disaggregating the sources of mobility, we find that demographic changes and employment changes account for a most of the mobility observed which is related to rapidly shifting household boundaries and a very volatile labour market in an environment of high unemployment. Using a multivariate analysis, we see that transitory incomes play a large role. We also find four types of poverty traps, associated with large initial household size, poor initial education, poor initial asset endowment and poor initial employment access that dominate the otherwise observed regression towards to the mean.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1030.

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Length: 39 pages
Date of creation: Feb 2004
Date of revision:
Publication status: published in: Journal of Development Studies, 2005, 41 (5), 865-897
Handle: RePEc:iza:izadps:dp1030
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  1. Anne Case & Angus Deaton, 1996. "Large Cash Transfers to the Elderly in South Africa," NBER Working Papers 5572, National Bureau of Economic Research, Inc.
  2. Jarvis, Sarah & Jenkins, Stephen P, 1998. "How Much Income Mobility Is There in Britain?," Economic Journal, Royal Economic Society, vol. 108(447), pages 428-43, March.
  3. Murray Leibbrandt & Ingrid Woolard, 1999. "A comparison of poverty in South Africa's nine provinces," Development Southern Africa, Taylor & Francis Journals, vol. 16(1), pages 37-54.
  4. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, vol. 46(5), pages 985-1012, September.
  5. Canto, Olga, 2000. "Income Mobility in Spain: How Much Is There?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 85-102, March.
  6. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
  7. McCulloch, Neil & Calandrino, Michele, 2003. "Vulnerability and Chronic Poverty in Rural Sichuan," World Development, Elsevier, vol. 31(3), pages 611-628, March.
  8. Patricia Justino & Julie Litchfield, 2003. "Poverty Dynamics in Rural Vietnam: Winners and Losers During Reform," PRUS Working Papers 10, Poverty Research Unit at Sussex, University of Sussex.
  9. Stephan Klasen & Ingrid Woolard, 2009. "Surviving Unemployment Without State Support: Unemployment and Household Formation in South Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 18(1), pages 1-51, January.
  10. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
  11. Fields, Gary S. & Cichello, Paul & Freije, Samuel & Menéndez, Marta & Newhouse, David, 2003. "Household income dynamics : a four-country story," Economics Papers from University Paris Dauphine 123456789/1562, Paris Dauphine University.
  12. 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, vol. 48(4), pages 443-69, December.
  13. Glewwe, Paul & Gragnolati, Michele & Zaman, Hassan, 2002. "Who Gained from Vietnam's Boom in the 1990s?," Economic Development and Cultural Change, University of Chicago Press, vol. 50(4), pages 773-92, July.
  14. Klasen, Stephan, 2000. "Measuring Poverty and Deprivation in South Africa," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 33-58, March.
  15. Jyotsna Jalan & Martin Ravallion, 2000. "Is transient poverty different? Evidence for rural China," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 82-99.
  16. Fields, Gary S. & Cichello, Paul & Freije, Samuel & Menéndez, Marta & Newhouse, David, 2003. "For Richer or for Poorer ? Evidence from Indonesia, South Africa, Spain, and Venezuela," Economics Papers from University Paris Dauphine 123456789/1560, Paris Dauphine University.
  17. Bound, John & Krueger, Alan B, 1991. "The Extent of Measurement Error in Longitudinal Earnings Data: Do Two Wrongs Make a Right?," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 1-24, January.
  18. 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.
  19. Piketty, Thomas, 2000. "Theories of persistent inequality and intergenerational mobility," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 8, pages 429-476 Elsevier.
  20. Gottschald, Peter T, 1982. "Earnings Mobility: Permanent Change or Transitory Fluctuations," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 450-56, August.
  21. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
  22. Bound, John, et al, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 345-68, July.
  23. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
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