Poverty and Inequality in the First Decade of South Africa's Democracy: What Can be Learned from Panel Data?

Using a longitudinal survey of South African households over the 1993-2004 period, this paper evaluates changes in income distribution since the end of apartheid. Inequality amongst these households has markedly increased this period as initially better off households consistently improved their economic well-being. Sharp increases in measured poverty over the first half of this period were partially reversed by later improvements for some poor households. Comparisons between actual and "market-generated" income distributions suggest that these improvements were driven in part by government transfer programs. Nonetheless, the chronically poor remain a significant fraction of the total poor, and 60% of those households that were poor in 1993 are still poor in 2004. Analysis of the next generation (that is the now grown children of the original survey households) shows a similar pattern of bifurcation, with one group moving ahead rapidly, and another mired at low living levels.