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Cross-Sectional Features of Wealth Inequality in South Africa: Evidence from the National Income Dynamics Study

Author

Listed:
  • Samson Mbewe

    (University of Cape Town)

  • Ingrid Woolard

    (SALDRU, University of Cape Town)

Abstract

In this paper, we examine the cross-sectional distribution of wealth in South Africa by using survey data from the National Income Dynamics Study (NIDS) for 2010-2011 (wave 2) and 2014-2015 (wave 4). Our results show that wealth inequality is very high, with the bottom half of the population owning very little and the top decile holding about 85% of total wealth in 2010-2011 and 2014-2015. While the results also show that wealth inequality within-Race and between-Race are high, we find that wealth inequality within-Race is higher and particularly in the Black race, with a greater concentration of the Black population at the bottom end of the wealth distribution. Further, the results show that the racial wealth gap between the Black race and the White race is high, with a typical Black household holding relatively less than 5% of the wealth held by a typical White household. Finally, we find that wealth varies significantly over the age profile, suggesting support for the life cycle hypothesis.

Suggested Citation

  • Samson Mbewe & Ingrid Woolard, 2016. "Cross-Sectional Features of Wealth Inequality in South Africa: Evidence from the National Income Dynamics Study," SALDRU Working Papers 185, Southern Africa Labour and Development Research Unit, University of Cape Town.
    • Handle: RePEc:ldr:wpaper:185
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    References listed on IDEAS

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    1. Modigliani, Franco, 1986. "Life Cycle, Individual Thrift, and the Wealth of Nations," American Economic Review, American Economic Association, vol. 76(3), pages 297-313, June.
    2. Olympia Bover, 2010. "Wealth Inequality And Household Structure: U.S. Vs. Spain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 259-290, June.
    3. Murray Leibbrandt & Ingrid Woolard & Arden Finn & Jonathan Argent, 2010. "Trends in South African Income Distribution and Poverty since the Fall of Apartheid," OECD Social, Employment and Migration Working Papers 101, OECD Publishing.
    4. Reza C Daniels & Arden Finn & Sibongile Musundwa, 2014. "Wealth data quality in the National Income Dynamics Study Wave 2," Development Southern Africa, Taylor & Francis Journals, vol. 31(1), pages 31-50, January.
    5. Finn, Arden & Leibbrandt, Murray, 2013. "Mobility and Inequality in the First Three Waves of NIDS," SALDRU Working Papers 120, Southern Africa Labour and Development Research Unit, University of Cape Town.
    6. Frank A. Cowell & Philippe Kerm, 2015. "Wealth Inequality: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 671-710, September.
    7. Edward N. Wolff, 2012. "The Asset Price Meltdown and the Wealth of the Middle Class," NBER Working Papers 18559, National Bureau of Economic Research, Inc.
    8. Derek Yu, 2010. "Poverty and inequality trends in South Africa using different survey data," Working Papers 04/2010, Stellenbosch University, Department of Economics.
    9. Anna Orthofer, 2015. "Private Wealth in a Developing Country: A South African Perspective on Piketty," Working Papers 564, Economic Research Southern Africa.
    10. Reza C. Daniels, & Arden Finn & Sibongile Musundwa, 2012. "Wealth in the National Income Dynamics Study Wave 2," SALDRU Working Papers 83, Southern Africa Labour and Development Research Unit, University of Cape Town.
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    Cited by:

    1. Aroop Chatterjee & Léo Czajka & Amory Gethin, 2020. "Estimating the Distribution of Household Wealth in South Africa," Working Papers hal-02876974, HAL.
    2. Simson, Rebecca & Mahmoudzadeh, Mina, 2024. "Inherited wealth in post-apartheid South Africa: new perspectives from probate records," LSE Research Online Documents on Economics 125939, London School of Economics and Political Science, LSE Library.
    3. Umakrishnan Kollamparambil, 2020. "Happiness, Happiness Inequality and Income Dynamics in South Africa," Journal of Happiness Studies, Springer, vol. 21(1), pages 201-222, January.

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    More about this item

    Keywords

    Wealth Distribution; South Africa; Cross-Section;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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