Determinants of Income Mobility and Household Poverty Dynamics in South Africa

TLDR

The study analyzes household income mobility in KwaZulu‑Natal (1993‑1998) using multivariate analysis of income, demographic, and employment data, highlighting the role of transitory incomes and identifying four poverty‑trap types. The authors find that income mobility in KwaZulu‑Natal was high relative to other countries, driven mainly by demographic and employment shifts, with transitory incomes playing a large role, and that four poverty‑trap types—large household size, low education, low assets, and poor employment access—dominate the observed regression toward the mean.

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.