Incomes in South Africa Since the Fall of Apartheid / Murray Leibbrandt, James Levinsohn, Justin McCrary.

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Leibbrandt, Murray

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TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w11384.Publication details: Cambridge, Mass. National Bureau of Economic Research 2005.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: This paper examines changes in individual real incomes in South Africa between 1995 and 2000. We document substantial declines--on the order of 40%--in real incomes for both men and women. The brunt of the income decline appears to have been shouldered by the young and the non-white. We argue that changes in respondent attributes are insufficient to explain this decline. For most groups, a (conservative) correction for selection into income recipiency explains some, but not all, of the income decline. For other groups, selection is a potential explanation for the income decline. Perhaps the most persuasive explanation of the evidence is substantial economic restructuring of the South African economy in which wages are not bid up to keep pace with price changes due to a differentially slack labor market.

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Previous	nber w11381 South Korea's Experience with International Capital Flows /	nber w11382 International Borrowing, Capital Controls and the Exchange Rate: Lessons from Chile /	nber w11383 Historical Perspective on Global Imbalances /	nber w11384 Incomes in South Africa Since the Fall of Apartheid /	nber w11385 Venture Capital Investment Cycles: The Impact of Public Markets /	nber w11386 A General Formula for the Optimal Level of Social Insurance /	nber w11387 India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit /	Next

May 2005.

This paper examines changes in individual real incomes in South Africa between 1995 and 2000. We document substantial declines--on the order of 40%--in real incomes for both men and women. The brunt of the income decline appears to have been shouldered by the young and the non-white. We argue that changes in respondent attributes are insufficient to explain this decline. For most groups, a (conservative) correction for selection into income recipiency explains some, but not all, of the income decline. For other groups, selection is a potential explanation for the income decline. Perhaps the most persuasive explanation of the evidence is substantial economic restructuring of the South African economy in which wages are not bid up to keep pace with price changes due to a differentially slack labor market.