Analyzing and Decomposing South African Income Inequality by Income Source, Race, and Poverty Level for 2008 and 2014

Authors

Zia Saylor, Williams CollegeFollow

Abstract

In South Africa’s apartheid regime a white minority controlled the black African majority from 1948 until 1994, creating income and wealth inequalities between the different races that linger today. This paper uses data from the 2008 and 2014 National Income Dynamics Survey (NIDS) to understand income inequalities within and between racial categories, to examine how different income sources contribute to overall income inequality, and to study how the interaction between race and poverty shapes the inequality between African households when decomposing into subgroups above and below the poverty line. For this study, I use Gini coefficients to measure inequality. My findings demonstrate that Africans have continually earned less than their white counterparts, with an increase in inequality in all racial groups except for Africans. The Gini coefficient for government income in both years is relatively low, suggesting that it serves as redistributive income. Finally, for African households, wage income is a big contributor to the overall inequality, while government income can be seen more clearly as a redistributive source of income. This has implications for future government policies designed to address inequality.

Recommended Citation

Saylor, Zia (2020) "Analyzing and Decomposing South African Income Inequality by Income Source, Race, and Poverty Level for 2008 and 2014," Undergraduate Economic Review: Vol. 17: Iss. 1, Article 13.
Available at: https://digitalcommons.iwu.edu/uer/vol17/iss1/13