South Africa

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Overview of Trends of Economic Inequality in South Africa

 

Has the dispersion of earnings been increasing in recent decades?Yes, the top decile of earnings relative to the median increased from 1997 to 2008.
Has overall inequality increased in recent years?Yes, the Gini coefficient in 2005 is 5 percentage points higher than in 1995. However, the Gini coefficient has dropped by 2 percentage points from 2005 to 2008.
Have there been periods when overall inequality fell for a sustained period?Insufficient evidence.
Has poverty been falling or rising in recent decades?Falling. The percentage of people living in households with per capita income below the national poverty line went from 53 in 1970 to 32 in 2004.
Has there been a U-pattern for top income shares over time?Yes, top gross income shares fell up to the end of the 1980s; in recent years they have been rising.
Has the distribution of wealth followed the same pattern as income?No evidence.
Additional noteworthy featuresBreak in the top shares series in 1990 (change in tax units, from married couples and single persons to individuals only).

Sources and References

Sources for the historical data series:

Overall inequality: Series 1: Gini coefficient of per capita income from Leibbrandt et al in Borat and Kanbur (2006, Table 3.1), where their estimates for 1996 and 2001 are linked to those for 1975, 1991 and 1996 of Whiteford and van Seventer (2000); series 2 from Leibbrandt et al (2010a, Table 5.17).

Top income shares: Shares of top 1 and top 0.1 per cent in total gross income from WTID, based on work of Alvaredo and Atkinson (2010). It is worth noting that the top shares series have a break in 1990. Data refer to married couple and single adults before 1990 and to individuals from 1990.

Poverty: Series 1: Percentage of people (all races) living in households with per capita income below R 3,000 (at 2000 prices) from van der Berg and Louw (2004, Table 5) from 1970 to 2000, linked at 1993 to series from Leibbrandt et al (2010, Table 1.3).

Individual earnings: Top decile as per cent of median from Leibbrandt et al (2010a, Table 5.19).

Wealth: no suitable data were found.

References:

  • Alvaredo, F and Atkinson, A B, 2010, “Colonial rule, apartheid and natural resources: Top incomes on South Africa 1903-2007”, discussion paper, University of Oxford.
  • Borat, H and Kanbur, R, editors, 2006, Poverty and policy in post-apartheid South Africa, Human Sciences Research Council, Cape Town.
  • Lachmann, and Bercuson, K, 1992, editors, Economic policies for a new South Africa, IMF Occasional Paper No 91, Washington, D.C.
  • Leibbrandt, M, Poswell, L, Naidoo, M, Welch, M, and Woolard, I, 2006, “Measuring recent changes in South African inequality and poverty using 1996 and 2001 Census data”, in Borat and Kanbur (2006).
  • Leibbrandt, M, Woolard, I, Finn, A, and Argent, J, 2010, “Trends in South African income distribution and poverty since the fall of apartheid”, OECD Social, Employment and Migration Working Papers No 101.
  • Leibbrandt, M, Woolard, I, McEwen, H, and Koep, C, 2010a, “Better employment to reduce inequality further in South Africa” in Tackling inequalities in Brazil, China, India and South Africa, OECD, Paris.
  • Van der Berg, S and Louw, M, 2004, “Changing patterns of South African income distribution: Towards time series estimates of distribution and poverty”, South African Journal of Economics, vol 72: 546-572.
  • Whiteford, A C and van Seventer, D E, 2000, “South Africa’s changing income distribution in the 1990s”, Studies in Economics and Econometrics, vol 24: 7-30.