Describing and decomposing post-apartheid income inequality in South Africa

This paper describes the changes in inequality in South Africa over the post-apartheid period, using income data from 1993 and 2008. Having shown that the data are comparable over time, it then profiles aggregate changes in income inequality, showing that inequality has increased over the post-apartheid period because an increased share of income has gone to the top decile. Social grants have become much more important as sources of income in the lower deciles. However, income source decomposition shows that the labour market has been and remains the main driver of aggregate inequality. Inequality within each racial group has increased and both standard and new methodologies show that the contribution of between-race inequality has decreased. Both aggregate and within-group inequality are responding to rising unemployment and rising earnings inequality. Those who have neither access to social grants nor the education levels necessary to integrate successfully into a harsh labour market are especially vulnerable.     

Measuring wealth inequality in South Africa: An agenda

ABSTRACT

Understanding wealth inequality has unique significance in South Africa. The co-existence of extreme poverty and extreme wealth is starkly visible. Apartheid-era inequality has persisted despite more than 20 years of democracy. Much of the recent research focus on inequality has been on inequality of income and of opportunities, especially quantitatively. With the recent project to release South African tax administrative data for research, this paper hopes to show how use of the tax administrative data can contribute to developing a refreshed quantitative analysis of wealth inequality, especially in estimating the top shares of the wealth distribution, and so contribute to the existing literature on wealth inequality in South Africa. The first section will explore why studying wealth inequality is of fundamental importance. The second section will review international data and methods used to research wealth inequality, before laying out suggested approach to doing such studies in South Africa.     

Labour unions and wage inequality among African men in South Africa

One Achilles' heel of post-Apartheid South Africa is the growing intra-racial income inequality, particularly among Africans. This paper examines the role of labour unions in explaining this phenomenon among African men given that labour markets are at the core of income inequality in South Africa. Using cross-sectional data drawn from Labour Force Surveys for 2001–10, we find a monotonically declining union wage premium. Further, our results indicate that unions have both compressionary and disequalising effects on wages. The disequalising effect dominates the compressionary effect, suggesting that unions have a net effect of increasing wage inequality among African men in South Africa. This finding implies that there is scope for unions to reduce inequality through initiatives that promote wage compression.     

The growth,poverty and inequality nexus in South Africa: Cointegration and causality analysis

This study empirically established the long-run relationship and causality effects that exist between growth, poverty and inequality. The analysis was carried out on a panel of nine South African provinces from 1995 to 2012. To capture poverty and inequality in a broader context, two measures of poverty (income and non-income) and three measures of inequality (income, education and land) were adopted for the study. The results confirm that there is a long-run relationship between growth, poverty and inequality. Notable results from the causality tests suggest that growth does not promote equal distribution of income in society but as income distribution begins to equalise, economic growth rises. This is regarded as growth–inequality disconnect. The unidirectional causality, which runs from income poverty to income inequality, suggests that a rising level of income poverty will lead to falling income inequality in the society; likewise, income inequality increases as non-income poverty declines.     

Redressing gender inequality in employment: the national and sub-regional policy 'fit'

This article examines the 'fit' between policy development regarding gender inequality in employment at sub-regional and national (UK) level, in particular focusing on the experience of women. Drawing on research undertaken in Coventry and Warwickshire, the article explores the question of how policy development at sub-regional level fits with national policy, and whether the sub-region is an appropriate, or effective, level at which to develop policy on gender inequality in employment. It is argued that while there needs to be recognition of the limited ability of sub-regional policy to confront structural issues, policy development at this level does offer potential strengths in redressing both gender inequality in employment and the relative lack of a gender dimension in local economic development.     

How social security policies and economic transformation affect poverty and inequality: Lessons for South Africa

This article examines how various characteristics of social and economic policy frameworks affect poverty and inequality levels in developing countries, principally in Botswana and Mauritius. The research findings suggest that poverty and inequality are lower in countries with generous and broad-based – rather than pro-poor – social security policies, and where social policies are complemented by economic policies promoting economic transformation rather than mere economic growth. While South Africa's challenges of combating poverty and inequality are shaped by its own historical context, the lessons from other countries offer the opportunity to reflect on the social consequences of various social and economic policy mixtures. In particular, it may be worth considering how to bridge the divide between the economically productive contributors to social security policies and the economically marginalised beneficiaries of such policies.     

Community poverty and inequality in western China: A tale of three villages in Guizhou Province

Using a census survey of households in Guizhou Province, this paper examines the patterns of village poverty and inequality and their major correlates. The results show that poverty incidences vary greatly among villages and inequality is relatively high within villages in these impoverished areas. Although agriculture is still the major source of livelihood in this inland western region, income from local nonfarm jobs and remittance is more unevenly distributed and accounts for the largest share of overall income inequality. Surprisingly, blood donation is another major source of cash income. On the expenditure side, health care was found to be one of the most important sources of inequality. The paper also found that the distribution of assets, particularly land holdings, contributes to overall income inequality.     

Wage inequality dynamics and trade exposure in South Korea

South Korea has experienced a great U-turn in its inequality trends during the past few decades. In this paper, we explore the role of international trade in its wage inequality dynamics over the 1998–2012 period, using a unique household panel survey. Our analysis reveals that most of the overall wage inequality occurs within sectors and educational groups rather than between them. However, the share in total inequality of the “between” variation across sectors and educational groups has moderately increased over time. Furthermore, we document that almost the entire aggregate wage inequality in both manufacturing and services occurs within different trade-exposure categories rather than between them, and this pattern is persistent through time. These results suggest that international trade might not be the main driving force behind the rising wage dispersion in South Korea in the last two decades.     

Pro-poor growth and social protection in South Africa: Exploring the interactions

This study evaluates the impact of South Africa's long-term economic growth on household poverty and inequality between 1995 and 2005. We find a decline in aggregate levels of poverty, but increasing levels of inequality. The evidence suggests that the growth model provides substantial redistributive income support to the poor through the social grant programme, whilst offering few returns to those in the middle of the distribution.     

Inequality in South Africa: The distribution of income,expenditure and earnings

This article empirically analyses the state of inequality in South Africa. International comparisons show South Africa to be among the most unequal countries in the world. The levels of income inequality and earnings inequality are analysed with a range of measures and methods. The results quantify the extremely high level of inequality in South Africa. Earnings inequality appears to be falling in recent years, with relative losses in the upper-middle parts of the earnings distribution. Decomposing income inequality by factor source reveals the importance of earnings in accounting for overall income inequality. The article concludes by observing that, internationally, significant sustained decreases in inequality rarely come about without policies aimed at achieving that, and suggests that strong policy interventions would be needed to reduce inequality in South Africa to levels that are in the range typically found internationally.     

Poverty,livelihood and class in rural South Africa

Using data from a national living standards survey undertaken in late 1993, this paper disaggregates and explores the economics of livelihood generation and class in rural South Africa in an effort to contribute to the ongoing and vociferous debate in South Africa about poverty and its alleviation. Pursuant to the suggestion of participants in a recent participatory poverty assessment, this paper analyzes what might be termed the class structure of poverty. After exploring the range of claiming systems and livelihood tactics available in rural South Africa, the paper offers a first look at who the poor are by disaggregating the rural population into discrete livelihood strategy classes. Non-parametric regression methods are used to then estimate and graphically explore the nature of the livelihood mapping between endowments and real incomes. In addition to identifying those endowment combinations that map to consumption levels below the poverty line (the asset basis of poverty), the topography of the estimated livelihood mapping helps identify the constraints that limit household's ability to effectively utilize their assets and endowments. These results suggest that poverty is a matter of not only having few assets, but also of constraints which limit the effectiveness with which those assets are used, and poverty and livelihood policy needs to be designed accordingly.     

Poverty in South Africa – a statistical analysis

Poverty is one of the major challenges facing democratic South Africa. This article focuses on poverty in South Africa, using the Income and Expenditure Survey conducted in 1995 by Statistics South Africa (formerly the Central Statistical Service). In the first part, different approaches that can be followed in the measurement of poverty are discussed. In the second part, Sen's approach to the measurement of poverty and the Chi-square Automatic Interaction Detection (CHAID) technique have been used to analyse the above data. CHAID is used to explore the relationship between the poverty status of the household (ie poor or non-poor) and other household characteristics. These variables can then be used as predictors of poverty status.     

International trade and within-sector wage inequality: The case of South Korea

This paper studies which factors contributed to the changes in wage inequality in Korean manufacturing over the last three decades. By adopting Akerman et al. (2013)’s decomposition method, we examine the relative importance of within-sector and between-sector wage variations in Korean manufacturing over the period of 1980–2012. Our analytic results confirm that within-sector wage variation explains the lion’s share of overall wage inequality. Taking this finding into account, we estimate the impacts of international trade, skilled-biased technological change and labor market conditions on within-sector wage inequality in Korea. Our estimation results suggest that there was a structural change in determinants of wage inequality before and after the mid-1990s. The influence of international trade mainly through heightened import competition on wage dispersion became relatively more conspicuous over the last two decades.     

社会资本在减轻农村贫困中的作用：文献述评与研究展望

近年来,社会资本在减轻农村贫困中的作用逐渐成为发展经济学家关注的一个热点。本文分别从静态和动态两个视角综述了相关研究的思路和方法：从静态视角来看,信任对于减少绝对贫困有积极的作用,但某些形式的社会资本难以减轻绝对贫困,关于社会资本是否能减轻相对贫困则尚未取得一致的认识;从动态视角来看,社会资本通过非正式保险的机制平滑消费、减轻暂时贫困,通过促进融资和创业、保护产权、促进公共品提供和劳动力流动,有助于消除长期贫困。总的来看,随着市场化进程的深入,社会资本反贫困的积极作用有减弱的趋势。本文基于理论评述,提出了深化社会资本的减贫理论机制（尤其是对相对贫困的作用机制）、市场化进程中的社会资本反贫困机制、改进社会资本测量、加强因果效应识别等未来的研究方向。     

Poverty,gender and migrancy: Lesotho's migrant farmworkers in South Africa

During the 1990s, eastern Free State vegetable farmers increasingly relied on migrants from neighbouring Lesotho for seasonal labour. This coincided with a major downsizing of the mine labour force in South Africa, hitherto the major employer of Basotho migrant workers. However, there was no simple process of transfer of unemployed migrants from the mining to the farming sector; rather, decisions were mediated by domestic relationships and household poverty in Lesotho. Basotho women and girls have been a major casualty of mine retrenchments and the drying up of remittances, and those with domestic skills but little formal training have been forced into the labour market, mainly domestic work in towns and labour on farms. This article examines the Basotho migrants' experiences and conditions of employment, the regulatory environment within which they are recruited and employed, and their future in the context of changing immigration and migration legislation in South Africa.     

Population policy in South Africa: a critical perspective

The argument in this article is that population growth and the concept of balancing resources against population growth is flawed when the context, in this case South Africa, is gross inequalities in resource distribution. The fact is that causes of poverty are located in the social and political structures which give people unequal access to existing resources or international aid. Population trends reflect the mode of production of that society. It is argued that the Malthusian law of population and the theory of demographic transition is ahistorical and inaccurate. The theory does not explain why population growth rates change. In South Africa, fertility reflects lack of control over one's life and poverty. Migrant labor in South Africa undermined normal social institutions and disrupted family life. Government has emphasized a fear of a future population crisis because of resource shortages and a fear of the growing black population. The South African population development program is extracted and discussed. Questions are raised about the theory of demographic transition, the way resource allocation is ascertained, the relationship between resources and population in a specific area, and the relationship between population growth and development in general. The theory of demographic transition is examined and the Western influences which contributed to population growth through requests for changes in sexual mores and the effects of colonization. When demographic transition theory postulates that mortality rates decline with industrialization as a result of access to medical care and an improved diet, it doesn't take into account the discriminatory health care allocation under apartheid, or the displacement of rural people from their land and undermining of the rural peasantry. Separate development has led to inferior schooling and lack of access to skilled employment. In discussing the availability of resources in South Africa, the question is raised as to whether there is an absolute limit to water, or whether water management or water conservation is at issue, as in the case example of the Transkei. What is economical reflects political decisions about national priorities when consideration is given to alternative strategies for increasing the water supply, or solving pollution problems. The potential to feed South Africans is substantiated, and the problems of maldistribution identified. In establishing the balance between family planning and development, the Population Development Program (PDP) expresses contradictory aims; i.e., seeking community involvement of a politically disenfranchised population. The concept of overpopulation and the application of population control programs in South Africa does not address the problems of poverty and powerlessness.     

One Kind of Freedom: Poverty Dynamics in Post-apartheid South Africa

A 1993 South African living standards survey documented the legacy of apartheid in the form high levels of inequality and human insecurity. Drawing on a 1998 re-survey of households in the 1993 study, this paper explores whether this legacy has been superseded, or whether apartheid's end has been only one kind of freedom that has left households in a poverty trap from which they cannot escape. After proposing a theoretically grounded dynamic poverty typology that distinguishes stochastic from structural poverty transitions, the paper goes on to estimate that significant numbers of the South African poor are potentially trapped in a structural poverty trap and lack the means to escape poverty over time.     

Poverty in South Africa: Statistical inference for decomposable poverty measures

The measurement of poverty involves two problems: identifying the poor and constructing an index to measure the intensity of poverty. The headcount ratio is one of the widely used indices for the measurement of poverty. This article considers some of the other decomposable (i.e. additively separable) poverty measures. The importance of this property (decomposability) and of subgroup consistency for a poverty measure is highlighted. Since most of these poverty measures are estimated on the basis of sample surveys, the statistical significance of the observed differences is tested using the distribution-free approach proposed by Kakwani (1993, Review of Economics and Statistics , 75: 632-40). The Income and Expenditure Survey conducted in 1995 by Statistics South Africa, then called Central Statistical Service, is used in the study.     

Developing a competitive concentrating solar power industry in South Africa: Current gaps and recommended next steps

The paper provides an overview of the attractiveness of the global concentrating solar power (CSP) industry, analyses South Africa's current capabilities in developing a CSP manufacturing capacity, and then makes recommendations regarding policy measures and an associated industry roadmap for developing a competitive CSP industry in South Africa. The analyses highlight that cost reduction is currently the most important stumbling block for the large-scale rollout of CSP. From a supply, or technology-push, perspective, changes such as cost-effective production methods, improved products through directed research and development, and reductions in operating and installation costs could be implemented. From a demand, or technology-pull, perspective, more ambitious targets need to be incorporated into the current South African policies with reliable support schemes to ensure long-term investment security for CSP systems. Recommendations are made accordingly. Specifically, South Africa should continue to promote strategic collaborations with potential CSP investors to access funding possibilities for projects.