Determinants of Income Mobility and Household Poverty Dynamics in South Africa

by WOOLARD, I. & KLAASEN, S. , 2004
Institute for the Study of Labor (IZA) Discussion paper series, No. 1030

Woolard and Klaasen analyse household income mobility dynamics among Africans in South Africa’s most populous province, Kwazulu-Natal, between 1993 and 1998. Compared to industrialized and most developing countries, mobility has been quite high, as might have been expected after the transition in South Africa. This finding is robust when measurement error is controlled for. When disaggregating the sources of mobility, they find that demographic changes and employment changes account for a most of the mobility observed which is related to rapidly shifting household boundaries and a very volatile labour market in an environment of high unemployment. Using a multivariate analysis, they see that transitory incomes play a large role. They also find four types of poverty traps, associated with large initial household size, poor initial education, poor initial asset endowment and poor initial employment access that dominate the otherwise observed regression towards to the mean.