The Racial Wealth Gap in South Africa and the United States

ABSTRACT

We present evidence on the Black–White Racial Wealth Gap in South Africa and compare it to the well-known patterns of the same gap in the United States. We find that the patterns in the overall racial wealth gap are similar between the two countries. In South Africa, the typical Black household owns 5 per cent of the wealth held by the typical White household. In the US, the typical Black household owns 6 per cent of the wealth held by the typical White household. In both countries, a racial wealth gap exists at different levels of education and income. The fact that the racial wealth gap in the US is similar to that of a country that recently emerged from apartheid is a sobering indictment. Conversely, the US presents a grim outlook of the future course of the racial wealth gap in South Africa, especially in the absence of economic redress. The similarities in the evidence between the two countries points to the potential utility of using the Identity Group Stratification framework for understanding racial wealth dynamics in South Africa, an approach that is absent in the literature.

KEYWORDS:

• Race
• wealth
• household
• South Africa
• United States

JEL CODES:

• G51
• J15
• Z13

This article is referred to by:

Commentary on ‘The Racial Wealth Gap in South Africa and the United States’ by Chelwa, Maboshe and Hamilton

Acknowledgements

We would like to use this opportunity to acknowledge and thank the reviewers and the editor of this journal who reviewed this article and aided in its publication. We would also like to thank participants to the Werner-Gren Foundation's Price of Wealth Symposium held in Pavia, Italy in August 2022 for insightful comments that improved the manuscript.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 Pressman (2015) presents a series of mathematical examples to illustrate this point.

2 The NIDS is conducted by the Southern Africa Labor and Development Research Unit (SALDRU) based at the University of Cape Town while the SIPP is an ongoing panel conducted by the United States Census Bureau (U.S. Census Bureau).

3 In South Africa, ‘Black’ as an identity can encompass all people of color. In this paper we take it to mean those officially designated as ‘Africans’ in South Africa to allow for ease of comparison with the US.

4 The racial wealth gaps persist even when wealth is expressed in per capita rather than at the household level. We present all the results presented in the main text in per capital terms in the Appendix.