Determinants of income mobility and household poverty dynamics in South Africa

Abstract

This article analyses household income mobility among Africans in South Africa's most populous province, KwaZulu-Natal, between 1993 and 1998. Compared to industrialised 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, it is found that demographic changes and employment changes account for 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, it can be seen that transitory incomes play a large role. Four types of poverty traps are found, 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 the mean.