Determinants of Income Mobility and Household Poverty Dynamics in South Africa

Abstract

In this paper we analyse household income mobility dynamics among Africans in SouthAfrica’s most populous province, Kwazulu-Natal, between 1993 and 1998. Compared toindustrialized and most developing countries, mobility has been quite high, as might havebeen expected after the transition in South Africa. This finding is robust when measurementerror is controlled for. When disaggregating the sources of mobility, we find that demographicchanges and employment changes account for a most of the mobility observed which isrelated to rapidly shifting household boundaries and a very volatile labour market in anenvironment of high unemployment. Using a multivariate analysis, we see that transitoryincomes play a large role. We also find four types of poverty traps, associated with largeinitial household size, poor initial education, poor initial asset endowment and poor initialemployment access that dominate the otherwise observed regression towards to the mean.

Keywords: South Africa, poverty, mobility, household structure

JEL Classification: D63, J12, J15, J6