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

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  • 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.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:jintdv:v:13:y:2001:i:6:p:671-689
    DOI: 10.1002/jid.806
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    Cited by:

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    2. Tregenna, F., 2009. "The Relationship Between Unemployment and Earnings Inequality in South Africa," Cambridge Working Papers in Economics 0907, Faculty of Economics, University of Cambridge.
    3. Almas Heshmati, 2006. "Continental And Sub-Continental Income Inequality," The IUP Journal of Applied Economics, IUP Publications, vol. 0(1), pages 7-52, January.
    4. Özler, 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.
    5. Heshmati, Almas, 2004. "Data Issues and Databases Used in Analysis of Growth, Poverty and Economic Inequality," IZA Discussion Papers 1263, Institute of Labor Economics (IZA).
    6. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute of Labor Economics (IZA).
    7. Chicoine, Luke, 2012. "AIDS mortality and its effect on the labor market: Evidence from South Africa," Journal of Development Economics, Elsevier, vol. 98(2), pages 256-269.
    8. Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo.
    9. Naude, Willem & Coetzee, Rian, 2004. "Globalisation and inequality in South Africa: modelling the labour market transmission," Journal of Policy Modeling, Elsevier, vol. 26(8-9), pages 911-925, December.
    10. Derek Yu & Sihaam Nieftagodien, 2007. "Poverty and Migration: Evidence from the Khayelitsha/Mitchell's Plain Area," SALDRU Working Papers 11, Southern Africa Labour and Development Research Unit, University of Cape Town.
    11. F. Le R. Booysen, 2004. "Income And Poverty Dynamics In Hiv/Aids‐Affected Households In The Free State Province Of South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 72(3), pages 522-545, September.

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