Taking stock of South African income inequality

Leibbrandt, Murray; Ranchhod, Vimal; Green, Pippa

doi:10.35188/unu-wider/2018/626-5

Cited by 16 publications

(13 citation statements)

References 14 publications

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“…Comparing deciles 1-4 to deciles 5-8 of unconditional income, the proportion of the income gap explained by the average differences in firm wage premia is greater than the proportion explained by average differences in worker wage premia. 10 This is a noteworthy finding for the South African literature which focuses on skills in explaining inequality, given that the worker fixed effect includes all invariant worker-specific characteristics such as education (see review in Leibbrandt, Ranchhod, and Green 2018).…”

Section: Variance Decomposition Of Wagesmentioning

confidence: 99%

Firms and inequality when unemployment is high

Bassier

2023

Journal of Development Economics

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Section: Variance Decomposition Of Wagesmentioning

confidence: 99%

Firms and inequality when unemployment is high

Bassier

2023

Journal of Development Economics

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“…The considerable literature on the 'triple crises' of unemployment, poverty, and inequality has been analysed primarily through the lens of skills shortages, returns to education, and the policy tool of redistributive social grants (e.g. Banerjee et al 2008;Leibbrandt et al 2010Leibbrandt et al , 2018. While these factors are relevant, roles of substantial wage-setting power of firms should be given more attention.…”

Section: Introductionmentioning

confidence: 99%

The wage-setting power of firms: Rent-sharing and monopsony in South Africa

Bassier¹

2019

WIDER Working Paper

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.Abstract: Using administrative tax records from South Africa for the period 2011-14, I find that firm wage premia explain 25 per cent of the total wage variance, 60 per cent of the gender wage gap, and 40 per cent of the gap between workers in the middle and the bottom of the income distribution. Next, I argue that in contrast to the rent-sharing literature, many studies of monopsony fail to use firm-level wage variation. I address this by using the estimated firm wage premia to estimate how wages are related to rent-sharing and monopsony power. I find that the average worker switching from a firm in the 25th percentile to the 75th percentile in profitability is paid 32 per cent more; and that the same switch across the distribution of monopsony, as measured by the Herfindahl-Hirschman Index in industry-by-local labour market hires, decreases wages by 10 per cent on average. When monopsony is measured using a separations approach, I find a labour supply elasticity of 0.75, suggesting substantial wage-setting power. Finally, I provide additional evidence supporting the applicability of the monopsony model in explaining these results. Differences in labour supply elasticities across gender and income groups account remarkably well for the corresponding average gaps in firm wage premia, and unions substantially increase rent-sharing in firms.

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“…However, measured by the Gini coefficient, inequality also rose from 0.55 to 0.63, a sobering development. Leibbrandt et al, (2018) also reveal that the earnings divide between whites and Africans fell from 67 to 57% and, similarly, the gap between the earnings of men and women reduced by 5%.…”

Section: Recent Trends and Developmentsmentioning

confidence: 79%

Income Inequality in Emerging Market Economies: A Multi-Country Study of Brazil, India and South Africa

IGBATAYO¹

2022

Journal of Pharmaceutical Negative Results

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Inequality refers to the extent to which income is evenly distributed across a population (IMF, 2022). The World Inequality Report (WIR, 2022) reveals the latest trends in global income inequality. It shows that the richest 10% of the global population currently earns 52% of global income, while the poorest half of the population takes 8.5% of it. In emerging market economies, indications are that income inequality is rising; sometimes accompanied by accelerating economic growth. Reports reveal that Brazil’s six richest individuals command the same wealth associated with the poorest 50% of the population, or about 100 million people. The World Inequality Report (2021) reveals India as a poor and unequal country, with the bottom half of the population earning only 13% of the nation’s income, while the top 10% controls 57% by 2021. In South Africa, the IMF (2020) acknowledges that the nation’s inequality has remained at high levels, perhaps the highest in the world. This is characterized by a highly skewed income distribution pattern, with the top 20% of the population controlling 68% of national income. These developments hold grave implications for emerging markets, particularly their ability to meet the 2030 Sustainable Development Goals. The main objective of this paper is to explore income inequality in emerging market economies, with a multi-country study of Brazil, India and South Africa. The methodological approach to the study involves both qualitative and quantitative analytical techniques. It relies on secondary data in publications from various sources, complemented by interviews of stakeholders in the study areas. Findings reveal the income inequality is undermining economic growth and development in emerging markets, fueling conflicts and triggering migration in some countries. The paper presents recommendations, underpinned by progressive taxation, social safety nets, gender equality, development of social services, and leveraging economic and financial incentives for labour-intensive industries.

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Taking stock of South African income inequality

Abstract: This study has been prepared within the UNU-WIDER project on 'Inequality in the Giants'.

Cited by 16 publications

References 14 publications

Firms and inequality when unemployment is high

Firms and inequality when unemployment is high

The wage-setting power of firms: Rent-sharing and monopsony in South Africa

Income Inequality in Emerging Market Economies: A Multi-Country Study of Brazil, India and South Africa

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