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An overview of poverty and inequality in South Africa - Working Paper prepared for DFID (SA)
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5. Inequality in South Africa
Because surveys across different countries are not directly comparable, it is not possible to say with certainty which country is the most unequal. But, it cannot be disputed that South Africa is one of the most unequal societies in the world11, with measured income inequality levels similar to Brazil. Based on the 1995 IES data, the Gini coefficient on household income (before taxes) was 0,60.
One way to express the degree of inequality in a country is to examine the expenditure shares of households by decile. (Households are ranked on adult equivalent expenditure and then divided into 10 groups with equal numbers of households in each.) Figure 4 shows that the poorest 40% (bottom 4 deciles) of households are responsible for less than 10% of total expenditure, while the richest 10% of households consume 45% of total spending.
The Theil-T index allows one to decompose inequality into within-group and between-group components. Using the Theil-T measure to decompose inequality by race, 40% of inequality is found to be due to between-race inequality,12 33% is due to intra-African inequality and 21% is due to intra-White inequality.
Footnote:
- The Taylor Commission report that South Africa is the 5th most unequal country in the world.
- By way of comparison, in Malaysia – a country which also has a history of racially-based inequality – the between-race component was only 13% in 1983.
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