Income mobility in a high-inequality society: Evidence from the first two waves of the National Income Dynamics Study

Abstract

The study of income inequality and income mobility has been central to understanding post-apartheid South Africa's development. This paper uses the first two waves of the National Income Dynamics Study to analyse income mobility using longitudinal data, and is the first to do so at a nationally representative level. We investigate both the correlates and root causes of moving up and down the income distribution over time. Using both absolute and relative changes as reference points, we highlight some of the factors associated with South Africans moving into and out of poverty.

Keywords:

• income mobility
• poverty persistence
• absolute transitions
• relative transitions
• labour-market outcomes

Notes

4 See Finn et al. (2012) for our assessment that the data are able to stand up to this task.

5 See Branson et al. (2012), Ardington et al. (2012) and Cichello et al. (2012).

6 See Daniels et al. (2012) and Posel (2012).

7 We do not report on Asian/Indians. As noted in Brown et al. (2012), even in wave 1 there were too few Asian/Indian individuals to support such within-group calculations and, as this group had significant attrition across waves, there is even less basis for cross-wave comparisons.

8 Further details of the use of this poverty line in a South African context can be found in Leibbrandt et al. (2010).

9 The mean age for stayers in the balanced panel is 29.4, while for movers it is 25.8.